Tag Archives: review

Cognitive engineers, not choice architects

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Although I’ve been reading at least as much as ever, it’s been difficult to find time to post about the books, given the length of my To Do list and the depth of untackled emails. One book I finished a while ago and wanted to flag up was Cognitive Gadgets: the cultural evolution of thinking by Cecilia Heyes. This is outside my territory, but as she incorporates cognitive science and linguistics in her work, I’ll be bravely inter-disciplinary too.

The book’s argument – as the subtitle flags up –  is that humans’ distinctive cognitive abilities are due to cultural evolution rather than genetic. It considers the evidence for cognitive differences between human babies and newborn chimps, and concludes that are rather subtle although importantly including a greater human ability to learn, and to remember. Then as humans grow we acquire our far greater distinctive cognitive skills from the society around us – they are not encoded in our minds, they are not simply shaped by social learning, but rather mechanisms or ways of thinking that have been built by cultural evolution: “They are cognitive gadgets rather than cognitive instincts: pieces of mental technology that are not merely tuned but assembled in the course of childhood through social interaction.” Some parts of the gadgetry will of course be inherited genetically, but the assemblage is the result of natural selection operating on cultural variation.

The book argues that this approach overcomes one of the issues with the idea of memes, because the issue is what units are memes measured in? What does the force of natural selection actually operate on – tunes, ideas and other memes? This seems unlikely. Heyes suggests the memes are grist to the mill of cognitive mechanisms such as causal understanding, imitation, reading aloud, causal inference, language, and other ‘gadgets’. The best gadgets thrive in the cultural evolutionary process. When it comes to inheritance mechanisms, it is social and cultural learning. This can largely occur inside individuals’ minds, but can also involve social processes such as story-telling, learning to take turns, group dances, even teaching.

History suggests that these have been quite robust – here we are, after all, with all the warp and weft of modern life. However, the theory does suggest a certain vulnerability, as many of these mechanisms could fail to be passed on: “The cognitive instinct view implies that human nature is relatively invulnerable to catastrophe. In a decimated and isolated human population … the group would lose some of its knowledge and skills. However, with each birth there would be a new child equipped with Big Special cognitive instincts. … In contrast the cognitive gadgets view implies that both grist and mills would be lost.  … The capacity for cultural evolution, as well as the products of cultural evolution, could be lost.” We are already failing to pass on to many children some quite basic (you’d have thought) gadgets such as critical thinking. Heyes specifically suggests looking at how moral learning has evolved and continues to do so.

Anyway, amateur that I am, I found this a persuasive approach and a really interesting book to read. It suggests a different approach to thinking about decision-making – not for example as a matter of setting up choices in ways that nudge flawed humans to do the right thing (but then what makes the choice architects any wiser?). Instead the engineering challenge is devising better gadgets, which is surely difficult but then humanity has invented them before.

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Intellectual property as theft

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I’ve been dipping into a new (and free to download but you can choose to support it by paying for a paperback or Kindle copy from Amaxon) book by Rufus Pollock, The Open Revolution. I’m not great at reading whole books online, hence the dipping. What I’ve read, though, I really like. It states: “This book is about making as much as possible of that information available to as many people as we can, since wealth, information and the opportunity to create them are now profoundly entwined”  – the information in question being private, digitally recorded and stored information, anything that could be patented or copyrighted.

The book starts by underlining that any property rights – and all economists agree well-defined property rights are fundamental to economic growth – are defined by politics and law and social norms. The argument that the intellectual property rights that currently prevail are problematic for the digital economy has been made before, and is forcefully made again here. The book argues for ‘open information’, that “can be universally
and freely used, built upon and shared.”

The book looks at patent and copyright protection, and draws the link to the accumulation of significant digital market (and political) power. It then jumps from the unquestioned powers such as Google and Facebook to a chapter on music streaming and Spotify – a marvellous service and one that can hardly be described as exercising undue power, especially when facing up against the recording industry titans. Pollock argues for replacing Spotify’s commercial model, which involves it in policing copyright protection, with a state-sponsored streaming model whereby governments collect a tax and allow citizens to access any streamed music:

“With no fee per track and no limitation on use, this all-you-can-eat buffet is a prototype for how one aspect of the Open world would operate. Money would of course have to be collected somehow to fund it, but instead of ten dollars a month to Spotify, this
could be a special fee incorporated in your taxes or added to your internet or mobile bill. This money would then be distributed according to usage, through remuneration rights fees.”

Subscription models are also of course all-you-can-eat ones and so similarly fit well the low or zero marginal cost economics of online. The difference between Spotify and this government-sponsored version of music streaming is scale: the more users pay, the lower the average fee. This is the rationale for public service broadcasting, so in effect we already have this model in the UK. My household pays an absolutely bargainiferous £2.89 per week to have access to a vast array of content for which the BBC has dealt with all the IP negotiations. I’m a huge fan of this model. But I don’t see why poor old Spotify – another marvellous service – should be prevented from asking for £10 a month for its streaming services.

So I’m with the book on the over-reach of IP laws in the digital age. I’d strongly argue for intense regulatory scrutiny of the advertising funded model of Google and Facebook, which might force them to an alternative business model – a flat fee, and utility regulation for some of their services perhaps. Some jurisdictions have started inquiries into the online ads market, almost a duopoly. But I’m not persuaded  public versus private ownership and control of the access services is the central issue. For sure, given that digital goods are essentially public goods and natural monopolies, there’s a free riding issue which argues for tax financing, but the first step must be to tackle the ridiculous IP laws.

There’s also a deeper question, I think, which is what one is paying for when it comes to fees to access digital content. The book argues: against “restrictions on which BBC programmes are freely accessible (having, of course, been paid for by the British public) and when, and where, to digital watermarks, paywalls around newspapers…”

Well, I happen to know something abuot restrictions on online acccess to BBC programmes, having chaired the original iPlayer approval process. One source of restriction is indeed a byzantine set of rights – different broadcast platforms in different countries may have specific rights to certain ‘windows’ or time periods. The licence fee payer in these cases has only paid for limited access rights, much as one might wish the limits to be less retrictive and the costs lower. Another source of restrictions was the desire on launching the BBC’s online services not to foreclose potential competing services, a worthy application of competition policy, and also not to cannibalise too quickly the BBC’s own linear services and commercial offer. These restrictions have been relaxed over time. The licence fee also buys not just the intangible asset of programmes – and I’m all for making the archive as freely available as possible – but also the continuing costs of investing in new content. The high initial fixed costs have to be covered. Similarly, I’m all in favour of newspaper paywalls – how else is new journalism going to get financed?

Anyway, this is as far as I’ve got. It is – as will be obvious – a stimulating read, although some of this will be familiar to those who have engaged with the ‘open’ argument before (eg James Boyle’s The Public Domain or Lawrence Lessig’s Free Culture). I’d be interested to hear other people’s reactions to these arguments. Although quibbling, I’m broadly very sympathetic to them. I’ll be buying a hard copy to read it properly….

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If it isn’t creative, you don’t have much of an economy

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I went to the launch last week of Patrick Kabanda’s The Creative Wealth of Nations, and was lucky enough to hear the great Amartya Sen (who wrote the foreword) give an introduction. It’s a terrific book, looking at the role of the arts in human well-being and economic development.

Kabanda grew up in Uganda in troubled political times, won a scholarship and graduated from Juilliard, then became for a time a World Bank development expert. This interesting range of life experience has convinced him of the importance of culture and the arts for three reasons: the direct economic importance of the cultural sector, the role of culture in stimulating the imagination and generating ideas, and its encouragement of collaboration and social capital. If it isn’t creative, you don’t have much of an economy.

The book covers several perspectives: there is a section making the general case for the economic importance of the arts; one looking at trade including the role of digital and tourism; chapters on gender and on the role of the arts in mental health and urban life; and one about data, and the paucity of statistics and weaknesses in conceptualising and measuring the creative industries and their economic development role.

There is an astonishingly small literature on the economics of arts and culture, given their importance in our lives but also – patently – the economy In the UK for instance it’s only recently that we’ve come to debate the ‘creative sector’ even though it’s comparable in scale to the financial sector. There are exceptions – Tyler Cowen is a prominent one. I’ve wondered if this reflects an avoidance of some difficult economic questions concerning how to handle public goods, externalities and self-fulfilling phenomena but this hasn’t kept economists from analysing environmental issues or financial markets. So I’m not completely sure of the reason. It’s tempting to suggest it’s because economists so often either don’t have or (more often) hide their human hinterland because of the culture of economics itself. Perhaps it’s because of the absence of data, the gaps in our understanding of how to measure intangibles with public good characteristics), and indeed the unmeasurability of some aspects of the arts. (The book kindly quotes me riffing on this.)

This lacuna in the economics literature of course makes The Creative Wealth of Nations all the more welcome. I particularly liked the chapters on mental health – so important for economic development in some countries and, crucially, in some rapidly-growing mega-cities fraught with violence in their slum areas – and on cultural tourism, both very thought provoking. The chapter on digital considers the oligopoly in the music industry and advocates a competing platform (dTunes, music for development) to create a market for local musicians who are below the radar of the big players.

As well as being a fascinating exploration of an area too little considered in economics, the book is also a throughly enjoyable read. It’s really well written and constructed around an extended musical metaphor – above my head but much appreciated anyway.

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Meta-policy

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It turns out that being involved in a start-up – the Bennett Institute for Public Policy at the University of Cambridge – is pretty busy. So although I’ve been reading, it’s a couple of weeks since I had chance to post a review. However, the passage of time means I can now write about Kaushik Basu’s The Republic of Beliefs, which is one of the most interesting and exhilarating books I’ve read for ages.

The book concerns the application of game theory to law and economics, which sounds dry but is profoundly important. Basu addresses a meta-question: why are some laws obeyed and some not? His answer voyages through the traditional law and economics literature but also social norms, history and institutions. He write: “For the law to develop roots and the rule of law to prevail requires ordinary people to believe in the law; and to believe that others believe in the law. Such beliefs and meta beliefs can take a very long time to get entrenched in society.” And, of course, it doesn’t happen in all societies.

To tackle the question, Basu looks at how to model (game theoretically) the actions of the functionaries of the state, the law enforcers. As he points out, the difference between social norms and laws is usually taken to be self-enforcement versus enforcement by the police or judiciary. So it’s necessary to think about when either kind of enforcement occurs. For how could law – “jottings on paper” – work other than by altering the payoffs of the game? There’s a logical mistake to assume that law enforcers will automatically enforce the law, as is normally done in the literature, without making an rational calculation about what’s in their best interest when everybody else is assumed to be a calculating rational maximiser.

But if the law enforcers are brought into the game rather than being assume deus ex machina, how does the law change behaviour and outcomes at all? The answer must be that it changes people’s beliefs about what other people might do. The law can try to create new focal points in the game of life: “The might of the law, even though it might be backed by handcuffs, jail and guns, is in its elemental form rooted in nothing but a configuration of beliefs carried in the heads of people in society. … It is in this sense that we are citizens of the republic of beliefs.”

This conclusion has a striking consequence: “any outcome that is made possible by creating a law could have happened without the law,” Basu argues. Outcomes can come about either through formal legislation or through informal social sanctions, although the law might help bring about the self-sustaining edifice of beliefs more readily. But laws that do not direct the economy to one of many possible equilibrium points will not be observed. Hence in societies where there is a good deal of corruption, the law is trying to enforce behaviour among law enforcers that is not in their interests, and so will fail.

Basu discusses the long shadow of history in the light of this. As he points out, there has been a good deal of attention paid (much of it outside of the field of law and economics) into how to create new focal points. Less has been paid to how to erase focal points – which is something the western democracies might well want to do after this era of madness is over, for example in terms of acceptable behaviour online or violence to individuals from ethnic minorities: “Memory, in these kinds of problems, tends to leave a residue that is hard to erase.” Law abiding behaviour founded on the belief that laws are followed is sticky, but so is its opposite.

The book speculates that in the game of life the deep ambiguity about the future – what will the set of games be? – also makes ‘focal players’ important. Some people may be able to set the meta-framework: “In war and conflict, where one has to encounter sudden and unexpected scenarios, it is important to have a well-specified leader.”

In general, we need to understand better the role of the process of the creation of laws and social norms, including how they can erode, tipping society from a ‘good’ to a ‘bad’ equilibrium. I find thinking about these regime shifts – which are clearly under way in many societies now – in these terms of self-enforcement incredibly powerful. The online world makes this doubly the case – as Basu writes: “Thanks to the march of technology, market structures are changing in ways that need smart collective interventions to make sure we do not sink the boat by each trying to enhance our own self-interest, … We may need to think of different kinds of legal and governmental interventions so enable the economy to function effectively.”

I hope nobody is put off by the appearance of game theory. This is a beautifully written book, very profound, and the small number of payoff matrices clearly explained. The Republic of Beliefs offers a distinctive and revealing perspective on public policy, and couldn’t be more timely.

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Finance, the state and innovation

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Yesterday brought the launch of a new and revised edition of Doing Capitalism in the Innovation Economy by William Janeway. Anybody who read the first (2012) edition will recall the theme of the ‘three player game’ – market innovators, speculators and the state – informed by Keynes and Minsky as well as Janeway’s own experience combining an economics PhD with his experience shaping the world of venture capital investment.

The term refers to how the complicated interactions between government, providers of finance and capitalists drive technological innovation and economic growth. The overlapping institutions create an inherently fragile system, the book argues – and also a contingent one. Things can easily turn out differently.

The book starts with a more descriptive first half, including Janeway’s “Cash and Control” approach to investing in new technologies, and also an account of how the three players in the US shaped the computer revolution. This is an admirably clear but nuanced history emphasising the important role of the state – through defense spending in particular – but also the equally vital private sector involvement. I find this sense of the complicated and path dependent interplay far more persuasive than simplistic accounts emphasising either the government or the market.

The second half of the book takes an analytical turn, covering financial instability, and the role of state action. It’s fair to say Janeway is not a fan of much of mainstream economic theory (at least macro and financial economics). He includes a good deal of economic history, and Carlota Perez features alongside Minsky in this account.

The years between the two editions of the book, characterised by sluggish growth, flatlining productivity, and also extraordinary changes in the economy and society brought about by technology perhaps underline the reasons for this lack of esteem. After all, there do seem to be some intractable ‘puzzles’, and meanwhile, just in time for publication, Italy looks like it might be kciking off the Euro/banking crisis again. The experience of the past few years also helps explain the rationale for a second edition. That’s quite a lot of economic history and structural change packed into half a decade.

Although I read the first edition, I’m enjoying the second as well. And for those who didn’t read the book first time around, there’s a treat in store.

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