Late night ethics

This book is somewhat off-topic for economists, but I’ve been dipping into the marvellous Ethics at 3am by Richard Marshall over the past couple of weeks. Marshall is the philosophy editor at 3am magazine (‘Whatever it is, we’re against it.’) and does the enlightening interviews ranging across the whole territory of modern philosophy. This subject was the bit of my PPE degree that didn’t agree with me, and although I still don’t find it easy, it does interest me more and more.

Anyway, this is Marshall’s second thematic collection of interviews (the first was ‘Philosophy at 3am’), with an introduction that guides you through the issues and schools of thought. The most interesting section is the applied ethics one, ranging from Luciano Floridi on information, privacy, AI, the role of the nation state, and more in ‘The Philosophy of the Zettabyte’ to Rebecca Gordon on torture in ‘Saying No to Jack Bauer’. (And by the way, there is an impressive representation of women philosophers here, given how male dominated the subject is – as bad as economics. There are 11 women and 3 non-white scholars interviewed, out of a total of 26.)

My favourite bits of each chapter are: answers to the first question (usually ‘What made you become a philosopher?’*); and the book recommendations each subject is asked to give. As for the actual philosophy, some of these are a heavier read than others & I have no confidence in my ability to understand, still less summarise them. As Marshall notes in the introduction, contemporary ethics is a broad landscape – but surely a field of philosophy most deserving of public exposure and debate. This book is a great introduction to the research frontier and well worth us non-philosophers trying to get our brains around. I hope he and OUP are now going to bring us an epistemology collection – Truth at 3am??

*”I was raised in a home where philosophy was a frequent topic for dinner conversation.” “People who are too sure of themselves.” “My impression of philosophy came from reading Plato, whose arguments I had found lame and fallacious.” “I was conscripted into military service and my gut feeling was to refuse to serve. I did not want to kill other people.” “I often think I would not have become a philosopher had my older brother not been killed one night in a car accident.” You get the idea.

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Inequality, revisited

There have been a few essay collections recently responding to the splash created by Thomas Piketty’s Capital in the 21st Century.

I reviewed one, After Piketty, edited by Heather Boushey and Brad DeLong, for The Chronicle Review. It was generally sympathetic. Anti-Piketty, edited by Jean-Philippe Delsol, Nicolas Lecaussin, Emmanuel Martin, was generally not.

Recently I’ve been dipping into The Contradictions of Capital in the 21st Century: The Piketty Opportunity, edited by Pat Hudson and Keith Tribe. I think it’s fair to say there is a reasonable consensus among the contributors to these various collections that Piketty’s theorising is flawed (in particular depending on an empirically invalid assumption about the substitution between capital and labour), that his application of a theory about productive capital to the data including housing wealth and financial capital is troubling, and that his call for a global wealth tax is (as Avner Offer puts it in his essay in this book) ‘utopian’. Equally, pretty much all would agree that Piketty, with co-authors, has done a terrific service in putting together the database, and in getting inequality on the agenda of both economists and policymakers.

Pat Hudson labels that here as ‘the Piketty opportunity’.  Her challenge to Capital in the 21st Century is its omission of globalisation and technology as drivers of inequality – if one is thinking about policies to mitigate inequality, r>g isn’t much help. She pinpoints financial markets, and regulatory and political beliefs, as key points of intervention – in other words, the specifics Piketty ignores in his generalisations. Avner Offer focuses on housing, and limiting its tendency to make wealth more unequal through credit controls.

The main sections of the book aim to particularise the analysis of inequality by looking at the trends, institutions and politics of different countries – one section on western economies, one on major economies elsewhere. As Luis Bértola points out here, Piketty is very Eurocentric.

Having these different national perspectives is a useful contribution to what is turning out to be quite an extensive new literature on inequality. While there was a substantial body of research on inequality before Piketty’s book was published in 2014, it was based on micro datasets, and focussed on individual questions such as benefit regimes or educational drivers of income. What we have now is a growing macro literature, and this includes global perspectives such as Branko Milanovic’s Global Inequality and François Bourguignon’s The Globalization of Inequality.

What’s needed now is for these two perspectives, the big picture and the individual outcomes, to get joined up. I think the late and much-missed Tony Atkinson came closest in his Inequality, and as a result had a set of eminently practical policies to propose.

Price: £16.95
Was: £24.95
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High hopes for growth

I’ve been re-reading (after a long time) David Landes’ The Unbound Prometheus, having found a 2nd hand copy in a Sedbergh bookshop, Westwood Books, earlier this year. It’s an interesting read, albeit showing its age (I found a 1993 edition, but the first was 1969). I’d forgotten that he looked at post-2nd world war growth in the final chapter, which also concludes with some reflections about the links between technological innovation and economic growth.

“The effective utilization of scientific and technical knowledge requires a whole sequence of decisions and action in the world of production and distribution. Pioneering entrepreneurs and managers must be prepared to risk money on the translation of ideas into commercially feasible techniques; while others must be incited by the prosepct of gain, or the fear of loss, to follow suit.” He goes on to say that the quality of management, the skills of the workforce, consumer tastes must also fall into place. “Scientific creativity is by no means an assurance of growth.” Interesting to see Paul David’s argument in The Dynamo and the Computer prefigured here. Growth is “a marriage of knowledge and action”, not the outcome of the impersonal forces of supply and demand.

Above all, growth will vary according to the particular needs, opportunities and history of different economies. Even the role of government varies greatly, Landes argues. The common factor in the postwar period, however, was, “A revolution of expectations and values. The expectations were not new; they were a return to the high hopes of the dawn of industrialization, to the buoyant optimism of those first generations of English innovators. Yet never before had they been so widespread; and never before had they been so strikingly confirmed by the facts.”

The trentes glorieuses seem like prehistory in today’s unsettled world. I’m not a techno-pessimist, and disagree with Robert Gordon’s thesis. But vision (expectations, we might say in economese) is a constant that really matters. I’ve always liked Paul Krugman’s 1991 QJE paper, History versus Expectations, on the importance of people weighting the future as more important than the past, if an economy is to grow. No high hopes, no growth.

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True wealth

Klaxon: this week sees the publication of National Wealth: What is Missing, Why It Matters, edited by Kirk Hamilton and Cameron Hepburn. The book is a collection based on the Wealth Project, itself a follow up to work by the World Bank on measurement for sustainability. As sustainability inevitably involves thinking about the future, there is a need to measure an economy’s stocks of different kinds of capital assets rather than current income or consumption flows (which is what our GDP lens does).

I have a chapter in the book about the political economy of moving to a new framework of economic indicators from the current system of national accounts. This is a shift analogous to changing a global technical standard, in which enough key participants have to make the move to tip everyone else into following suit. I conclude, though, that for this to come about there has to be enough consensus about what new standard to move to, which is still a work in progress. There’s a proliferation of dashboards and alternative indices. We need just one framework to get the shift.

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Best friends

As re-entry reading for the onset of the Autumn semester, I indulged in The Infidel and the Professor: David Hume, Adam Smith and the Friendship That Shaped Modern Thought, by Dennis Rasmussen, on the way home this weekend. This is a chatty account of the friendship between David Hume and the 12-years younger Adam Smith, discussing the extent to which Smith’s thought was influenced by Hume (a lot, Rasmussen argues) and analysing the differences between them (he identifies four areas of disagreement: the nature of sympathy, the role of utility, the foundation of justice, and the effects of religion). As a total Hume fan, I enjoyed reading it, and it’s a well-written book. You don’t need to be an expert on either to enjoy it, and get some flavour of the milieu of the Scottish Enlightenment.

Judging from Jesse Norman’s review of the book in Prospect, it might help not to be an expert on either, as he concluded it has little to say about the influence the two had on modern thought. As he points out, the problem Rasmussen faced is that the correspondence between the two men on which he based so much is rather small, and that mainly letters from Hume. Rasmussen fills out more in an interview in 3am Magazine with the stellar Richard Marshall.

I warmed to one comment Rasmussen makes here – a point also covered in the book: “Just as Smith’s contributions to moral philosophy have been unduly neglected in favor of Hume’s, Hume’s contributions to political economy have been unduly neglected in favor of Smith’s. As an economist Hume has long been regarded as a minor predecessor of Smith, insofar as he’s taken notice of at all, but in fact he argued for free trade and stressed the moral, social, and political benefits of commerce several decades before The Wealth of Nations appeared. Hume’s essay “Of Luxury” (later retitled “Of Refinement in the Arts”) is one of the most forceful, comprehensive, yet succinct defenses of the modern, liberal, commercial order ever written.”

As he notes here, Smith was in his turn an ethicist and analyst of human nature. We do like to pigeon hole people, but one of the joyous aspects of the Enlightenment is not only that knowledge was expanding so quickly but that it touched on so many different areas. We lose so much that falls into the gaps between disciplinary boundaries.

The thing I took away from The Infidel and the Professor was quite how scandalised so many people were by Hume’s skepticism about religion. The book has quite an extensive discussion about the differences between Hume and Smith on religion, and reckons Smith was just as sceptical but keener to observe social convention, though the evidence for this seems rather speculative. But, if public opinion did find Hume as outrageous as Rasmussen says, who could blame Smith for keeping that much quieter about his views. And Smith did honour Hume after death by insisting, in a letter written for publication, that Hume had died in good spirits and completely untroubled by the prospect of nothingness. When so many people hoped the infidel Hume would repent on his deathbed and embrace god, out of fear if nothing else, to make it clear this had not occurred was an act of true respect and friendship.

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