Economics, order and murder

At the moment I’m alternating between intense reading of books and papers for my new course, and fun stuff, while saving the really light reading for a few days’ holiday later this month. So the advance copy of The Mystery of the Invisible Hand by Marshall Jevons arrived at the perfect moment, and it’s a very enjoyable romp – campus novel meets detective novel meets economics primer. Nobel Prize winning economist Henry Spearman uses economic logic alone to solve a murder, the power of the little grey cells amplified by the muscular rigour of economics.

Marshall Jevons is, needless to say, a pseudonym, and this is the third in the series, following on from A Deadly Indifference and Murder at the Margin.

There are many nice touches. I liked the fact that the classroom building is called Hamermesh Hall. I *loved* this quotation from Carl Christ at the head of one chapter: “I have heard an unkind critic say that an economist is someone who would sell his grandmother. This is quite wrong. An economist, or at least a good economist, would not sell his grandmother to the highest bidder unless the highest bid was enough to compensate him for the loss of his grandmother.”

As a way to bring some basic economic concepts to life for students, this is an excellent series, although of course not Great Literature. Russ Roberts’ novels, The Price of Everything and The Invisible Heart, are similarly both enjoyable and educational. (He, by the way, has a terrific new book out, How Adam Smith Can Change Your Life.)

As I’ve long argued, economists are particularly amenable to two strands of genre fiction, detective and sci-fi novels. The ur-models of rational homo economicus are Hercule Poirot (or perhaps Sherlock Holmes) and Mr Spock, logical, calculating, and totally brilliant naturally. Paul Krugman was famously inspired to become an economist by reading Isaac Asimov’s Foundation Trilogy.

I’m a detective fiction person myself – economists have that same impulse as the writers of these books, I think, namely to bring some order to a disordered world.

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Clash of the titans

John Kay’s column in the Financial Times (Authors should back Amazon in dispute with Hachette) today criticises the authors who have written a letter to Amazon siding with Hachette (and potentially other big publishers) in their dispute over e-book terms. The authors wrote: “Without taking sides on the contractual dispute between Hachette and Amazon, we encourage Amazon in the strongest possible terms to stop harming the livelihood of the authors on whom it has built its business. None of us, neither readers nor authors, benefit when books are taken hostage.”

John says in effect that the authors are naive, and that the big publishing conglomerates are not serving writers (or readers) well: “The large conglomerates that have come to dominate publishing are run by people who love money more than they love books. These support activities have been cut back in the interest of maximising the revenue, from control of access to distribution. Today’s bestseller lists are filled with imitations of books that have already been successful; footballer’s memoirs, celebrity chefs, vampires and female-oriented erotic literature.”

He’s forgotten the crossover categories in this list – the chefs’ memoirs, sporting cookbooks, and vampire-oriented erotic literature – but the point is clear. However, although I agree that one should have no sympathy for Mega-Publisher Corp Inc, I am not as sanguine as he appears to be here about Amazon’s market power. The Amazon-Hachette dispute is a good old-fashioned clash of the titans as they fight over the distribution of producer surplus, and it’s hard to see obvious benefit for writers and readers either way.

Actually, I think the publishing business has responded to new technologies in a far nimbler and more innovative way than the music industry did, in contrast to John’s argument. But the innovation is largely coming from outside the Mega-Publishers and is at the mercy of Amazon for distribution. Amazon does not treat small fry benignly, as Brad Stone’s The Everything Store describes.

There are some unanswered questions about the Amazon-Hachette dispute. Here are  Amazon’s and Hachette’s own statements, and here are some very good questions from Joshua Gans, who is the go-to economist on this issue.

I should add, as always when writing about Amazon, that the links on here go to Amazon because of the associates programme, which covers for me the marginal cost of the blog. If another retailer would introduce a similar programme, I’d switch.

The education of an economist

In the Financial Times this morning Deirdre McCloskey has a tantalising curtain-raiser for her forthcoming book, Bourgeois Equality: How Betterment Became Ethical, 1600-1848, and Then Suspect. Her argument is that it isn’t the accumulation of capital but rather innovation that is the engine of wealth, collective and individual:

“Taxing the rich, or capital, does not help the poor. It can throw a spanner into the mightiest engine for lifting up those below us, arising from a new equality, not of material worth but of liberty and dignity. Gini coefficients are not what matter; the Great Enrichment is.”

McCloskey has been on an anti-Piketty tour – see for example this by Evan Davis in The Spectator, and McCloskey herself speaking recently to the IEA. It’s intriguing that two of the economists most admired by progressive, anti-free-market, reforming economics people – McCloskey and Piketty – are in such disagreement.

The forthcoming book is the final volume in McCloskey’s trilogy, The Bourgeois Era, preceded by Vols 1 The Bourgeois Virtues: Ethics for an Age of Commerce and 2 Bourgeois Dignity: Why Economics Can’t Explain the Modern World (I reviewed the latter for the New Statesman.)

Occasionally I might disagree with Prof McCloskey, but I love her books. One of my all-time favourites is How to Be Human (though an economist) and of course her book with Stephen Zilliak, The Cult of Statistical Significance: How the Standard Error Costs Us Jobs, Justice, and Lives.

  

I love even more the reading lists for her courses. Just look at the instructions for Economics 326: The History of Economic Thought, 2006, for example, or the graduate seminar Economics 263, or Economics for Humanists. It’s clear one would have to really work, but who wouldn’t want to be taught economics like this?

Ape selfies, art and money, and e-books

What’s the connection between ape selfies, the relationship between art and money, and e-book prices?

There have been interesting posts about each of these subjects this week, making the connection clear.

That ape selfie – Wikipedia has rejected photographer David Slater’s claim to own copyright in the picture, arguing that the animal took the photo. David Allen Green wrote a fascinating FT blog about UK law on this question. The law here says the ape can’t hold copyright but it doesn’t necessarily belong to the camera owner – it depends on the circumstances. Green concludes:

“A thing made by an animal may well be appreciated by humans, but not everything liked by humans can be bought and sold as a chattel or as an intellectual property right. And so when such things do occur, we should not seek to monetise them as some form of property; we should instead realise how lucky we are that such wonderful things exist at all.”

Mr Slater’s view is that as a professional photographer, he needs to be able to monetise pictures captured by his camera. Which takes us to a long n+1 essay on payment for art. It used to be that artists (including writers) who made money were “sellouts”, but now the complaint is that it’s becoming impossible to make money from art because of the ease of digital copying. Hence all the intellectual property debates, and the madness of copyright lasting for 70 years after the death of an author, as if length of term somehow compensates for loss of enforceability. As the essay concludes: “One did not become a writer in order to starve, but nor did one become a writer in order to get rich.” (George Gissing certainly didn’t.) And besides – as the incomparable Dave Birch pointed out to me with this link – there are ways of making money, even if not the same ways as of yore.

Which takes me onto the third link, this post by Toby Mundy criticising Amazon’s philistinism in selling books at ever lower prices by squeezing publisher’s margins. He frames it in terms of the contribution of the book form – long, complex, detailed – to the human achievement of civilisation – but finally makes it an argument about short term consumer gains versus the long term: “The result of these changes will be a much diminished eco-system for stories and ideas, with many fewer publishers and authors earning anything. Ultimately this may benefit a small number of people who hold stock in Amazon, but it will do precious little for our wider culture.”

The common theme is the value of culture, of course, in its form as a photo or book say, and how that value is distributed. It is about monetary versus non-monetary value, and about power in the marketplace and the polity. The specifics are new, the debate is old. All property involves social conventions derived from power relationships. When I sit in a cafe to have a cappucino, I have purchased the liquid in the cup, but not the cup – the owner would be outraged if I walked off putting the cup in my bag. That’s the convention, and the price for the drink reflects competition among local cafes.

I think the mistake many people make in thinking about who gets the value from digital cultural products is to assume that the market from which content creators (or publishers) will get their dibs are the same as in the offline world. The technological ease of copying (cf Walter Benjamin, The Work of Art in the Age of Mechanical Reproduction!) means the conventions have to change, and changing social conventions is never a smooth process. But George Gissing was poor long before the Web, despite being a marvellous writer, and I’m willing to bet David Slater will be a better-known and potentially more prosperous photographer post-ape selfie incident.

 

Distinguished company

Needless to say, I’m overjoyed to find GDP: A Brief But Affectionate History on the long list for the FT/McKinsey Business Book of the Year.

It’s in massively distinguished company. I’ve reviewed on this blog a few of the others on the list. Thomas Piketty’s Capital in the 21st Century is of course at the top of the long list (review here). Duncan Green of Oxfam has done a nice Pocket Piketty summary today.

I’ve also read Flash Boys by Michael Lewis (review here); Fragile by Design by Charles Calomiris and Stephen Harberer (review here); and The Second Machine Age by Erik Brynjolfsson and Andrew McAfee (review here).

That leaves loads to read. I’m going to order next Shredded by Ian Fraser and House of Debt by Atif Mian and Amir Sufi.

The range of subjects under the general heading of business books is extensive. And how encouraging to see good, accessible writing about business and economics thriving. It makes me think Toby Mundy’s recent paean to books in general is correct. A cheering start to the day all round.