Moral sentiments and economics

Having read it some years ago, I’ve been looking through Economic Analysis, Moral Philosophy and Public Policy by Daniel Hausman and Michael McPherson while revising a paper for publication. It reminded me – if ever I absorbed it properly in the first place – that economists use the word ‘normative’ in a specific sense. It means, to us, the opposite of positive, something involving ethics or value judgements, and therefore outside the scope of what economists aim to do. We concentrate on ‘positive’ questions, following the distinction famously made by Milton Friedman, and Lionel Robbins before him.

However, as Hausman and McPherson argue, while economists claim ethical issues are a sphere apart, they/we often assume rationality – and that itself implies a moral stance. “Like morality, rationality is normative. One ought to be rational. One is wicked if not moral and foolish if not rational.” The book goes on to argue the case that the “moral principles implicit in standard views of rationality are implausible.” As a card carrying economist, I don’t agree with all they say here, but do wholeheartedly agree that economics and ‘moral sentiments’ cannot be separated. The impartiality economics aims for in trying to insist on being a ‘positive’ science is laudable, and economics should continue to distinguish the technical and value-laden elements of analysis. But we should not continue to shy away from the ethical debate. Doing so has not served the reputation of economics at all well.



What are top people reading?

It’s always interesting to hear what books people refer to at a conference. At the end of last week I attended one with people in the UK and French business and policy worlds. These were the titles I noted being mentioned:

Life 3.0 by Max Tegmark

WTF by Robert Peston

I, Robot by Isaac Asimov

Price: £6.69
Was: £8.99

Homo Deus by Noal Yuval Harari

Les trentes glorieuses by Jean Fourastié

Price: Check on Amazon

Devil’s Bargain by Joshua Green

This week I’m going (for the 2nd time – the 1st was in 2001) to the World Economic Forum in Davos – feeling a bit like one of the entertainers on board a cruise liner, as I’ll be talking about measuring the economy. I’ll report back on the reading materials of the global elite. I’ll miss Donald Trump’s speech on Friday but doubt he’ll be citing many books, so that’s ok.


Growth, no growth, degrowth

I just read the 2nd edition of Tim Jackson’s now-classic Prosperity Without Growth, which has been out for a few months, and it’s a book I’d recommend to anyone but especially economics students. Although most students do now learn about environmental constraints and trade-offs, we do socialize them quickly into thinking about economic growth as the objective of policy. It is all too clear that the failure to take account of externalities and the depletion of natural capital assets means we’ve paid a high price for past growth. Measuring these better to ensure they’re incorporated in the choices society makes is part of my own research.

Havings said this, and commending the book, I have one central problem with its argument, as with some others making similar arguments. And that turns on the understanding of what (GDP) growth consists in. Even those who acknowledge the importance of services in the economy – as Tim Jackson does – then consistently talk about growth as consumer demand for material products, for stuff: “How is it that with so much stuff already we still hunger for more? Would it not be better to halt the relentless pursuit of growth in the advanced economies and concentrate instead on sharing out the available resources more equitably?” So stuff and growth are conflated.

As I’ve been pointing out for 20 years, growth in the advanced economies is increasingly non-material – accepting that we import stuff embodied in goods, which must be accounted for. The archetype of modern growth is a new idea – that an aspirin can avert cardio-vascular problems as well as cure headaches; that apps on one device can replace multiple material objects.

This is why indicators like the Genuine Progress Indicator, that flatline from the 1970s on while GDP rises, are so unpersuasive. I disagree with Tim when he writes: “[T]he continued pursuit of economic growth doesn’t appear to advance and may impede human happiness.” So although I agree completely that the usefulness of GDP as a welfare measure is declining, I don’t think we know how to weigh against each other the environmental minuses and innovation pluses. This is why I’m obsessed with how we conceptualise and measure society’s economic welfare, including measuring assets to give us a handle on sustainability; but many of the innovations do advance human well-being. I remember the 1970s, and though the music was better, many aspects of life were far less satisfying. Patti Smith and Siouxsie & the Banshees aren’t enough to make me want to turn the clock back.

This is an important, possibly existential debate, so I hope the book is being widely read. I also appreciate its (only slightly lukewarm) defence of economics: contrary to the impression some environmetalists seem to give, many economists care passionately about our environment and sustainability, & we think our intellectual tools can make a useful contribution.


Exact Thinking in Demented Times

I bought Exact Thinking in Demented Times by Karl Sigmund for the genius title, and absolutely loved the book. The subtitle explains what it’s about: The Vienna Circle and the Epic Quest for the Foundations of Science. Karl Sigmund, the flyleaf tells me, is a maths professor at the University of Vienna and one of the pioneers of evolutionary game theory. He also co-curated an exhibition on the Vienna Circle, the inter-war group of philosophers, mathematicians and physicists who between them revolutionised the world’s understanding of – well, the world. Against idealism and metaphysics, seeking the unity of science, their logical positivism transformed Anglo-American philosophy, not least because so many of the Circle’s members had to flee Austria in the 1930s.

Who would have thought this could make a rip-roaring read? The book explains the philosophy and maths in just enough detail – there were a few bits about the maths I decided not to re-read – and weaves the ideas with the personalities, friendships and jealousies. It adds up to a wonderful intellectual history of a place and time. Jenny Uglow’s equally wonderful The Lunar Men would be a good comparator.

I’m not a big fan of logical positivism, or so I thought. Exact/Demented sent me back to my undergraduate copy of A J Ayer’s Language, Truth and Logic, which introduced the ideas to the British public (well, bits of it). I wrote the date inside, and I must have bought it enthusiastically in my first week at Oxford. Looking again reminded me how frustrating I found what seemed like meaningless quibbles about words – “easily understood by the layman”, the back cover claims. Hah! However, Exact/Demented gives a much richer account of the strands of thought in the Vienna Circle and makes it clear that the linguistic rabbit hole was but one element of the underlying empiricism. The account also completely reinforces my belief that Wittgenstein’s work is objectively meaningless and what’s more he was a complete pillock. (Although when I tweeted something from Douglas Hoftstadter’s intro to the book to the same effect, it turned out there are a few pro-Wittgenstein trolls on Twitter, so I’ll get into trouble with them again.)

Other obvious characters feature in the story, such as Kurt Godel, Rudolf Carnap and the positivism critic Karl Popper, as well as Einstein, and lesser known (to me) people, including the Circle’s leading light Moritz Schlick, and some economists orbiting around (Oskar Morgenstern, John von Neumann). The story is bookended by two murders of philosophers, and two tragic world wars. The Vienna Circle survivors ended up split between universities in the US and UK – on one occasion Bertrand Russell, Albert Einstein, Kurt Godel and Wolfgang Pauli all ended up socialising in Princeton, discussing time travel. What an occasion.

Given my own research interest at the moment, I was particularly pleased to learn about Otto Neurath’s innovative data visualization method, through his Institute for Pictorial Statistics, designed to present socio-economic statistics in a form most people could understand. The signature style was the use of rows of little human figures, which ended up being called ‘Isotype’. Who knew infographics were invented in the 1930s?

Poignantly, in 1939 Otto Neurath published a bestseller called Modern Man in the Making. “It employed a tight mesh of texts and pictures to describe the dawning world of globalized exchange, international migration and limitless progress.” How his readers must have been wishing that were true.

And this is the other attraction of this wonderful book. Its subtext throughout is both the need for and the threat to Exact Thinking in Demented Times, a message relevant today.



From ‘Arab Spring’ to Fake News

I’m late to Zeynep Tufekci’s excellent Twitter and Teargas: The Power and Fragility of Networked Protest. It analyses the impact of social media on political events such as the Arab Spring – remember that? – and Occupy. Her thesis is that online organization is a powerful political tool when combined with offline organization, but cannot substitute for it; and the evidence presented here from a range of mass protests certainly convinces me. The problem mass socially-networked protests have lies in their norms of decision making, which are slow and non-hierarchical. This makes them unable to change tactics quickly when hostile authorities respond to the protest, and so the moment passes. If, however, there is a parallel offline organisation with more conventional decision-making structures, the political protest can adapt and continue.

The book is informed by the author’s experiences visiting protests since long before Twitter and Facebook (and this makes it an engaging read). There is a lot of intriguing detail. Why, she asks, do longer-lived protests like Occupy Wall Street or Gezi Park set up libraries? Even clinics and clothing exchanges are probably unnecessary. She argues that the spirit of protest involves expressiveness – taking part is a meaningful or even joyful activity, often with a sense of ritual or transcendence..

A later interesting section of the book concerns the way authoritarian governments are fighting back against protests using social media themselves – not so much by cutting off the internet (which happened more in the early, Arab Spring, days than it does now) as by flooding social media with confusion and false information. I think the book was written before we all became familiar with the phrase Fake News, but here it is presented as a tactic of repression. Even in tightly controlled China, online comment is rarely shut down unless it looks like becoming organised offline action.

All in all, a highly recommended book, albeit not a particularly cheering one. The Arab Spring feels a long time ago, those days when democracy looked like it was still spreading rather than retreating. Tufekci herself ends on a slightly positive note, reporting a conversation with a young activist (one of Sain’s Indignados) about where things might go. The young woman replies with a phrase echoing one the Zapatistas used much earlier: “We will keep walking and keep asking questions.” As long as pepole have the energy to keep on, there’s hope.

I read the book on my trip to the ASSA meetings, also reading Darren McGarvey’s Poverty Safari, a second book by the wonderful new discovery Mick Herron, and Svetlana Alexievich’s Boys in Zinc. All highly recommended.

Price: £5.43
Was: £7.99