Economics in the crisis

from David Ruccio

It is extraordinary to sit here in the midst of the crisis and read the self-satisfied pronouncements of economists about the state of the discipline.

To be clear, what we’re talking about is the state of the discipline in, not after, the crisis. Whether we’re referring to the situation in the United States or Europe, this is still the deepest and widest set of economic problems since the Great Depression. It is, in short, the Second Great Depression—and there’s no end in sight.

With that sorted out, let’s look at what macroeconomists are writing. First, there’s Simon Wren-Lewis, who explains that “not much” has changed in the teaching macroeconomics since the crash of 2007-08. 

So why was my answer not much? Because although the crisis has added material, nothing has really been thrown away as a consequence of what has happened. We have not, either individually or collectively, decided that the Great Recession implies that some chunk of what we used to teach is clearly wrong and should be jettisoned as a result. Speaking for myself and my second year undergraduate lectures, quite the opposite is the case. As Paul Krugman has pointed out many times, recent developments have in many ways been a vindication of the basic Keynesian model that lies at the heart of any undergraduate macro course.

Indeed, I would go even further. The mess we are currently in is due in part to policy makers ignoring this basic macroeconomic analysis.

So, according to Wren-Lewis, the problem lies not with basic macroeconomic theory but with the fact that the policy advice of macroeconomists has not been followed.

Much the same view is reiterated by Paul Krugman and Jonathan Portes, who claim that the theory espoused in the macroeconomic section of Econ 101 “has done just fine.” What I want to know is, which part of that theory doesn’t need to be reexamined in light of the events of the past few years?

Let me provide a few examples. At the level of teaching, where is the history of the theories and debates that have taken place in macroeconomics since at least the publication of John Maynard Keynes’s General Theory? And what about the theories other than the neoclassical and Keynesian versions of IS/LM—where do they fit into the curriculum?

As far as the theory is concerned, what role does uncertainty play in their models? And how do crises occur endogenously, rather than as the result of some exogenous disturbance in either the real or financial side? And what about the role of inequality in determining the level and rates of growth of prices, output, and employment (not to mention the external sector)? And, finally, what’s the explanation of how alternative economic policies are adopted and implemented, other than as irrational mistakes?

Macroeconomics, as taught in universities and utilized in economic analysis, was not in good shape prior to the crisis. And it’s certainly in no better shape now, after the financial crash and in the midst of the most severe economic downturn since the Great Depression.

What, then, about microeconomics? Diane Coyle [pdf] seems to think that, while macroeconomics may be in shambles, all is well in the area of microeconomics, based on the concepts of opportunity cost and cost-benefit analysis.

Unfortunately, macroeconomics is not only what people (mistakenly) think all economists do, it is indeed an important part of what policy economists actually do. Most macroeconomists work either for the government or in financial markets. Even though the discipline does not have a consensus view of how the economy as a whole should be analysed, there is no escape from the need in either case to work on the basis of some reasoned assumptions about the near future (or forecasts, as they are called). The comparison with weather forecasting is often made – another imprecise science, marked by bitter arguments about the right analytical framework for understanding the climate as a whole, but essential for the planning of everyday life. Although the uncertainty attached to weather forecasts is widely understood, economic forecasts are – wrongly – regarded by the general public as more certain, not least because of the way some economists at any rate have talked about them. Macroeconomic forecasters need to be more explicit about uncertainty. There are other lessons to be taken from the groupthink that prevented so many economists from seeing clearly the risks in obvious precursors of trouble such as persistent current account imbalances and the build-up of debt. These would include paying more attention to economic history, to institutional realities (such as the changing character of the financial system in the 1990s and 2000s), and perhaps a greater pluralism or inter-disciplinarity in the practice of macroeconomics. . .

So there are some valid principles that economists know and agree among themselves to be true, but to many non-economists these may fly in the face of ‘common sense’. There is also a steadily growing body of empirical policy research, which might be rather nuanced or context-dependent, but equally is scientifically well-founded and commands professional consent. Applied microeconomists have a pragmatic common language for assembling evidence and discussing policy. Disagreements concern the details of empirical methods or the interpretation of evidence. This is normal science at work.

What Coyle overlooks is that, even in applied microeconomics—however augmented by psychology and institutional detail—the presumption is that costs and benefits can be calculated and markets designed to achieve the desired results. But costs and benefits to which classes? Where is the limit on possible costs and benefits arbitrarily drawn? And, finally, to use Coyle’s language, how is it possible to separate the resource-allocation and value-performative effects of markets?

No, neither macroeconomics nor microeconomics is in good shape. They weren’t before the crisis began and they’re not now, in the midst of the Second Great Depression. Both areas need to be fundamentally rethought.

Economics in the crisis remains in crisis.

  1. July 4, 2012 at 1:44 am

    “And how do crises occur endogenously, rather than as the result of some exogenous disturbance in either the real or financial side?”

    Indeed: See Point 4 in my Eight Elementary Errors of Economics https://rwer.wordpress.com/2012/06/07/eight-elementary-errors-of-economics/

    And the seven other fundamental problems summarised there, although the list is of course longer. The subject (neoclassical economics) is in much worse shape even than David indicates here.

  2. July 4, 2012 at 2:11 am

    Alan Greenspan, appears to have seen the light – at least a bit of it. He says on Bloomberg TV that the macroeconometric models used by the Fed, IMF and others are, “wholly inadequate in understanding how the complex financial system works both in the U.S. and globally. The consequence is that you can not forecast crises of any sort because they all are fundamentally financial crises.” http://www.bloomberg.com/video/95061279-alan-greenspan-sees-global-slack-in-the-economy.html

    • Alice
      July 4, 2012 at 11:36 am

      Pardon me. Mr Greenspan says you cannot forecast crises coming?

      He couldnt. In fact he caused one big one.

      Why am I not surprised he couldnt forecast one? The truth is Greenspan practised economics not by obersavtions and good science but by pure ideology and manipulating bad science to fit his particular religion (libertarianism and no rules in markets),

      • July 5, 2012 at 1:51 pm

        I agree with your overall criticisms of him. And maybe he is trying to hide his own guilt. But don’t you think he has leveled a stinging criticism of standard economic theory when he says the models used by the Fed, IMF, etc are “wholly inadequate…” and “can not forecast crises?”

  3. Merijn Knibbe
    July 4, 2012 at 6:32 am

    It sometimes even borders on the ridiculous. In a recent, very interesting article titled

    “The (other) deleveraging. What economists need to know about the modern money creation process”, Singh (a senior IMF economist), and Stella (director of Stellar consulting) state, about money:

    “In the simple textbook view, savers deposit their money with banks and banks make loans to investors (Mankiw 2010). The textbook view, however, is no longer a sufficient description of the credit creation process. A great deal of credit is created through so-called ‘collateral chains’. We start from two principles: credit creation is money creation, and short-term credit is generally extended by private agents against collateral. Money creation and collateral are thus joined at the hip, so to speak. In the traditional money creation process, collateral consists of central bank reserves; in the modern private money creation process, collateral is in the eye of the beholder.”

    However. When you consult the macro economics textbook of Blanchard e.a. (yes, Blanchard as in: “Blanchard, chief economist of the IMF”) on ‘money’, nothing about this ‘joined to the hip’ relation between modern money and credit can be found. The same for the Bernanke e.a. textbook. Why are students of economics supposed not to know what economists are supposed to know! Are Mankiw, Bernanke and Blanchard really that ignorant? Hard to believe. But it might be true (the monthly ECB press release on monetary developments however does spell out the ‘joined at the hip’ relation).

  4. July 4, 2012 at 11:17 am

    Yes, David. As your Coyle says, “This is normal science at work”: but at a time when Kuhn’s “revolutionary” science is needed. The issue is not just the economic profession, it is Hume’s self-confined scientific method, which has framed the now too often taken-for-granted amorality of science and the legal morals of the supposedly “democratic” post-Malthus/Darwin political Leviathan. [A Treatise of Human Nature vols 1 and 3].

    You say “neither macroeconomics nor microeconomics is in good shape. … Both areas need to be fundamentally rethought”.

    Agreed; so how do you envisage going about that?

    How about looking behind Hume to the political-economic contexts and concepts informing Christ’s ethics and Bacon’s scientific method? At an up-to-date science transformed by the discovery of electric circuits, dialectical/evolutionary development of information-embodying structures, and the discovery that logic, nested algorithms and error correction (including our own) can be represented and performed by electric circuits? At a future envisaging Tony Lawson’s Reorientation of economics in light of Roy Bhaskar’s Dialectic of scientific method?

    Geoff, I’m entirely with your pointing to the elementary errors of economics, but isn’t the fundamental one that of treating all things (including your eight elementary errors) as all of equal significance: a sort of “flat earth” rather than “algorithmic” understanding of logic? [For the many readers who won’t realise this, Algorithms are named for the inventor of arabic enumeration, in which a limited set of numerals are reused in positions of greater or more trivial significance and interpreted by a cyclic process. Almost all economists treat of the earth, human effort and property as if they had the same insignificance as money (i.e. as Hume’s points on a graph) – or vice versa: as if money had the same significance as them].

  5. July 4, 2012 at 5:10 pm

    “In the simple textbook view, savers deposit their money with banks and banks make loans to investors” (Mankiw 2010).

    The truth is… a bank creates money as promises of legal tender it DOES NOT have. A deposit is an INDEFINITELY DEFERRED promise of legal tender that assures the bank it won’t need any legal tender as long as it has the deposit. Money created as one debt is spent, earned and lent again to a bank as a deposit. Thus all money in our system is “twice-lent” by its very nature.

    As always, I invite anyone, especially anyone on the long list to the right, to refute my theory. You will have my full cooperation in doing so.

    Steve Keen claimed he would refute my twice-lent money theorem back in April. So far not a word from him or anyone else. So the opportunity to be the first is still open!

    http://paulgrignon.netfirms.com/MoneyasDebt/Incorrect_Diagnosis.pdf

    http://paulgrignon.netfirms.com/MoneyasDebt/twicelentanimated.html

    http://paulgrignon.netfirms.com/MoneyasDebt/Analysis_of_Banking.html

  6. ???
    July 4, 2012 at 8:09 pm

    Your criticisms of applied micro are bizarre. First off, the market is not necessarily the agent in micro–the individual often is. Thus distributional effects don’t have to be an issue that can’t be addressed. “To whom?” is not a question that takes down all of micro as we know it–that’s not necessarily a hard thing to factor in. Neither is “what is the limit of cost and benefits?” What exactly are you criticizing here?

    The one interesting question here is “How is it possible to separate the resource-allocation and value-performative effects of markets?” You don’t–at the most basic level, supply & demand analysis necessarily calculates price and quantity together. Again, though, you don’t necessarily need to analyze those effects separately if you take markets as exogenous relative to your analysis. For example, dynamic changes in lots of markets won’t affect the mechanisms of those markets, except in extreme cases or extreme markets.

    As usual, I’d love to hear more than vague platitudes and self-backpatting from the RWER crowd and more specific examples of papers/studies that they think are flawed, given that David Ruccio is, in fact, economics faculty.

  7. robert r locke
    July 5, 2012 at 8:14 am

    Perhaps the problem is not what the neo-classical econnomists talk about but what they don’t talk about.

  8. July 5, 2012 at 11:26 am

    When ??? puts aside his cowardice sufficiently to disclose his identity and defines his terminology sufficiently to indicate whether it refers to the disinformation of inflatable money values or things and services of necessary and lasting real value, then perhaps I’ll be interested in rather than irritated by what he has to say. I am (I am glad to say) not an economist but a real scientist. I read others to get to understand them and their concepts, not just to glorify myself or please my paymasters by nit-picking.

    As far as I am concerned the negative issues here are not about “who said what”: they are ultimately about “By their fruits you shall know them”. The fruits of the present politico-economic establishment are the insane policies so many people are now absolutely unnecessarily suffering under. Paul Grignon’s unnecessary defence of his “twice-lent” theorem irritates me too, but at least it is defending conclusions about the intolerability of the privatisation of money creation which others have reached via their own observations and different arguments. What we – including you, ??? – ought to be doing is comparing the logical and practical justification of the various possible alternatives including stay-as-we-are, using a methodology like SSDAM systems analysis designed for that job.

    • July 5, 2012 at 2:28 pm

      “Paul Grignon’s unnecessary defence of his “twice-lent” theorem irritates me too, but at least it is defending conclusions about the intolerability of the privatisation of money creation.”

      Sorry to be irritating, Dave. I continue because I am ignored. The “cause” actually has nothing specifically to do with the manner of money creation and everything to do with the problems inherent in the concept of money as a “single uniform commodity in limited supply”. If all the gold in a gold money economy were concentrated into the hands of the powerful, most of it would also enter circulation as debt and then be lent again.

      So far, of all the names to the right, only Peter Earl has indicated an understanding of where I am going with this argument and he wrote a glowing review.

      http://paulgrignon.netfirms.com/MoneyasDebt/Peter_Earl_Real-World_Economics_Review_Blog.htm

      The necessary result of my theorem is a CHANGE IN THE CONCEPT OF MONEY from a “thing in itself” the value of which is inversely proportional to its abundance, to a “promise of something specific from someone specific”, the value of which is DEFINED BY ITS REDEMPTION, independent of the quantity of “money” in circulation.

      Which, in simpler terms is “barter money” as used in medieval markets, illustrated in this short cartoon.

      http://www.digitalcoin.info/The_Essence_of_Money.html

      The bankers in the City of London reportedly just paid 200,000 pounds for a report that gives them the same advice that they could have picked up from my third movie for a measly $26.95.

      MONEY as DEBT III – Evolution Beyond Money
      http://paulgrignon.netfirms.com/MoneyasDebt/MAD3.htm

      SUMMARY REPORT 21 pgs

      http://217.154.230.218/NR/rdonlyres/18B9B3E2-18C0-4B48-8612-13AB8AF2625F/0/BC_RS_CapacityTradeandCreditSummaryFindings_web.pdf

      While never saying so outright, this report, in essence, claims that self-issued business-to-business barter credit is the “new future” of money, and recommends that the City of London get into the credit brokerage business so that multinational corporations and governments will also move into a “self-issued credit” or, as the report calls it, a “capacity credit” system.

      This report does not go so far as to recommend replacing the current system of “sovereign currencies” and “traditional finance” with “self-issued credit”. Nor does it mention making business-to-business barter credits available to the general public as money. (my proposal) It restrains itself to recommending business-to-business barter systems for “maximizing capacity utilization” and as a solution to “tight money” problems.

      However, the full transition could be self-propelled by failure of the current system, and that seems to be written between the lines.

      Has this stopped being unnecessary and irritating yet?

      • July 6, 2012 at 10:09 am

        But I’ve said all along I agree with you, so why the defence? I’m trying to add insights which allow me to move from criticism to constructive alternatives to both the practice and ethos of the current system, credit cards resulting not in “self-issued credit” but in “self-accepted real credit” which we are personally responsible for repaying in real terms, eg by working. If you need your “measly $29.95″s that’s a reason we should be changing the system: you should have been sustained by us while you were doing all that work. But in any case let me commend you for your video presentations: such fun as well as being so insightful and interesting.

    • ???
      July 8, 2012 at 9:32 pm

      Dave, what I’m interested in is legitimate criticism of economics that can be used to progress the field, despite what you may think about me and my “paymasters.” My motivation for being here is that my undergraduate economics department was filled with many who sympathize with this publication. They would gripe about how much better economics would be if their criticisms were taken to heart, but I found such criticisms often vacuous and unconstructive.

      What I’m sick of is the same arguments harping on problems that either don’t exist or have been addressed. In addition, such criticisms often come from people outside of economics. Normally I would find that extremely valuable, except it often becomes clear that the critics aren’t responding to anything in academic economics, but instead its (admittedly ugly) public image.

      I want to hear real criticism instead of meaningless platitudes–for example, Deirdre McCloskey’s writing on statistical significance interacts with current literature in a powerful way, criticizing the tendency of economists to focus on ‘existence’-proving studies rather than those studying magnitude, and gives a good argument for renewed focus on the latter. It’s a concept that I’ve taken to heart in my own research. Ruccio’s question of “who does it benefit?” is an extremely important one, but I see it as a question posed rather than as a challenge that shakes our methodological foundation.

      As for your suggestion of SSADM, I don’t think I’ve said anything about it on these blog comments, because I don’t know much about it. My guess is that there’s a pretty large amount of theoretical infrastructure you’d have to rebuild in order to start looking at things from that framework in economics, because there hasn’t been any work in that before, and I haven’t seen a convincing argument that it brings anything new to the table. (To be honest, though, I haven’t heard anyone promoting such a framework other than you, on here.) I’m also somewhat skeptical of such approaches because of how badly the econophysicists have done–the research I’ve seen from them doesn’t seem to rely any structural understanding, and chooses what affects what rather arbitrarily.. For an example of what I mean, see the choice of gold reserves, computers per capita and the proportion of Internet users as affecting migration here: http://economiclogic.blogspot.com/2012/02/econophysics-of-migration.html.

      By the way, I think the battle over economics being a ‘real science’ or not is mostly a distraction, so your declaration of being a ‘real scientist’ doesn’t particularly bother me, nor does the word-salad name-dropping faux-philosophizing of your previous post. As for my anonymity, you might call it cowardice, but some of us prefer our privacy. I have a unique name that identifies me much faster than “Dave Taylor.” And my identity shouldn’t affect the truth (or untruth) of what I say, should it?

      • July 9, 2012 at 9:41 am

        From Ted Trainer in RWER57:

        “The initial claim being argued here (and detailed in Trainer 2010b) is that consumer-capitalist society cannot be reformed or fixed; it has to be largely scrapped and remade along quite different lines.” That was my conclusion too. Thus, with markets, I’m only interested in understanding them, not nit-picking.

        So economists like you shouldn’t be playing old songs about markets while Titanic sinks; you should be looking for an alternative. Paul Grignon’s little video about medieval markets is not only delightful but helped me realise that auctioning is not marketing in the case of unscarce necessities: it is wholesalers ganging up to deprive honest producers of a decent living, as is happening in the UK milk trade right now. What Paul didn’t point out (about medieval price fixing for manufactures) was that those in trade guilds fixed normal prices so that big players couldn’t corner their market by undercutting local craftsmen.

        Being a scientist, I appreciate the value of theory, but also the disvalue of misleading theory. Like Paul – but without his artistic talents – I’ve started again from first principles, which in my case include the theories of flow circuit dynamics worked out for electrical engineering, the multi-level unambiguous language worked out for scientific modelling, and the error-correcting dynamic logics summarised “macro” as cybernetic control and “micro” in the entity-flow-history-audit trail methodology of SSADM. Since even economists need to be able to understand economics it has to be simple, which in diagrammatic form it is. (Quite ordinary electricians, programmers and systems engineers learn via diagrams to be able to see what is happening in their own fields). However, as Paul has found, there are none so deaf as those who don’t want to here, and none so blind as economists who haven’t begun at the beginning: with learning to imagine a river of money trapped between the “least resistance” path of its banks, “see” what it means to add to and subtract from its flows, and envisage the hydrological cycle of river, sea, evaporation and (where conditions are right, e.g. where the air is being cooled by forests) precipitation.

        On anonymity, who you are (e.g. a straight person or a crook) is LIKELY to affect the truth of what you say, and in any case, our PERCEPTION of that depends on what we know of your record.

  9. July 5, 2012 at 12:30 pm

    Says ???: ‘The one interesting question here is “How is it possible to separate the resource-allocation and value-performative effects of markets?” You don’t. At the most basic level, supply & demand analysis necessarily calculates price and quantity together’.

    The REALLY interesting question here is whether supply and demand analysis IS at the most basic level. I would have put it at the level of the type of logic [of states or processes], from whence stem unasked questions about the appropriate type of mathematics, the human context from which it is proposed to abstract discussion of supply and demand, and in a monetary micro economics, how to avoid comparing apples with bananas: exchanging a mere promissary note for things of real value. With modern automated stock control methods it is now possible to eliminate price changes as an indicator of demand and require theories to account directly: for “supply and demand of what”?

    • ???
      July 8, 2012 at 9:40 pm

      The fact that we exchange what you call ‘promissory notes’ for things of inherent value is indeed interesting on a deep level, but it’s not necessarily relevant when one just wants to analyze markets, because most people don’t think about the philosophical underpinnings of fiat money when they go to the grocery. I also don’t think you’re comparing apples to bananas in this case–a person has a value for both their dollar and their dinner, even though the dollar gives value to the person through society and the dinner gives value physiologically.

  10. robert r locke
    July 8, 2012 at 10:35 pm

    “What I am interested in is legitimate criticism of economics that can be used to progress the field.” And people in this blog are not interested in a legitimate criticism of economics and how to progess the field? You really have a good guys bad guys view of the world. And it must be a great disappointment for you to see your field falling apart as a legitimate field of study. That is what this blog is a symptom of, historians spot this sort of thing regularly when they see knowledge go into decline. Go back to the 1950s and 1960s and look at the excitement in economics when the model builders took over and then fast forward to more reccent times when the critique of the model builders holds sway and you’ll see what I mean by decline. I asked the head of OR in Trinity College Dublin (in 1987) if OR had not had a sort of nervous breakdown in the late 1970s, when Ackoff’s article “The Future of Operations Research is Past” appeared. He said, “yes. We did” What you want us to believe is that this sort of historical comment has nothiing to do with economics. Maybe you should listen more carefully to your undergraduates. I had a long talk recently with an undergraduate in economics;he said that he was in despair because he is not learning anything useful. He’s wasting his time. As an educator and friend of his mother I found this conversation most distressing.

    • Alice
      July 11, 2012 at 10:18 am

      rr says

      “Go back to the 1950s and 1960s and look at the excitement in economics when the model builders took over and then fast forward to more reccent times when the critique of the model builders holds sway and you’ll see what I mean by decline.”

      I see it so clearly.

  11. July 10, 2012 at 11:58 pm

    http://ehp03.niehs.nih.gov/article/fetchArticle.action?articleURI=info%3Adoi%2F10.1289%2Fehp.113-a509

    What we know thanks to well-established scientific knowledge about biological evolution as well as the finite and frangible physical world we are blessed to inhabit would lead sensible people, I suppose, to conclude that there is nothing or precious little that can be done to change the ‘trajectory’ of human civilization. So powerful is the force of evolution that we will “do what comes naturally” by continuing to overpopulate the planet and await the next phase of the evolutionary process. So colossal, reckless and relentless, too, is the unbridled expansion of the global political economy now overspreading the surface of Earth. Even so, still hope resides within that somehow humankind will make use of its singular intelligence and other unique attributes so as to escape the fate that appears ‘as if through a glass darkly’ in the offing, the seemingly certain fate evolution appears to have in store for us. Come what may. In the face of all the global ecological challenges that we can see now and here, I continue to believe and to hope that we find adequate ways of consciously, deliberately and effectively doing the right things, according the lights and the science we possess, the things that serve to confront and overcome the evolutionary trend which seems so irresistible. Perhaps others would comment on human agency, human population dynamics, endless economic growth and the potentially catastrophic consequences of the unrestricted overproduction, overconsumption and overpopulation activities of the human species on our watch.

    • July 11, 2012 at 12:28 pm

      I share your hope, Steven, having been brought up on the story of God finding humanity so awful that (Noah’s Ark excepted) he drowned the lot and started again, and later, refraining from destroying us only by becoming human himself so he could love us (“warts and all”) as members of his own family.

      I think the point missing from your comment on mankind’s “singular intelligence” is that it is dependent on intelligent and honest education (“standing on great men’s shoulders”) and undermined by self-righteous professional jealousy (“shooting [or crucifying] the messenger”).

      I think your focus on “well-established scientific knowledge” misses the vital point that most of what we know about systems has been learned not from the natural world but from “scientific” development of human discoveries, instrumentation and communications technology. As this has not been realised by educators, it is not surprising they haven’t taught governments et al the communication systems necessary for intelligent population control.

      Thus your link to an excellent article on “the precautionary principle” throws up the following:

      “As the adage goes, scientists have had difficulty ‘seeing the forest for the trees’ because traditional scientific methods focus primarily on parts of a large system, not on the large system itself”.

      From this it follows that scientists/economists tend to see only their own bit of reality, and not concepts that great men in engineering, administrative and caring functions (including religion) have contributed.

      “Another dimension of this change in focus is the development of “joining edge” research, in which leading ideas and best practices from multiple disciplines are brought together in a collaborative effort to examine large, complex systems.

      This had been the hope raised by the formation of the RWER and WEA, but sadly it fails to recognise that successful societies stand on the shoulders of ethical language, error-correcting logic, adequate mathematics, history, evolving science and the marriage of physical and information technology, just as the evolution of humanity stands on the shoulders of atomic energy, chemistry, cellular, bi-sexual plants and complex animal life-forms. These are separate levels which don’t have “joining edges”, so engineering, ancient history and even [lower-level] mathematical insight still get at best a chary welcome here, if not professional cold-shouldering.

      With their growing membership, the RWER and WEA have a great opportunity to open up the economics and political professions, if only their editors will open their pages, in light of the reality that “traditional scientific methods” are still rooted in the verbal logic of the 3rd century B.C. and the ignorant, pessimistic, politicised communications philosophy of the early 18th century, to relevant 20th century technical advances in the understanding of systems analysis, personality, language, communication and control.

  12. robert r locke
    July 11, 2012 at 5:40 pm

    When I first read Marx I thought his analysis of capitalism brillant. I still think so, but I learned that he didn’t have much of an idea about socialism. So that’s my problem with most systemic thinking, it is dehumanizing, and we end up in 1984 or in Jacque Ellul’s the Technological Society. That’s why most ordinary people want to pin their hopes on a Messiah. I personally go for inspired leadership that is institutionalized in a society based on moral order. How do we fit inspiration and moral order into systems, Dave?.

  13. July 12, 2012 at 1:30 pm

    A lovely challenge, Robert: much appreciated.

    I have myself been inspired by following up the spirit rather than the letter of significantly innovative thought, with particular reference to Christ, St Benedict, G K Chesterton (forgotten inspirer of Gandhi and Schumacher), J M Keynes, Indian librarian S R Ranganathan and information scientist C E Shannon. That takes us full circle, for like Christ, C E Shannon is, from the point of view of systems design, all about embodying [institutionalising, “automating” a morality based on an ethos of] the acceptance and correction of error. I feel privileged to have seen your “inspired leadership” in Good Pope John, but clearly, even Christ’s church has not managed to institutionalise that. Are you familiar with W S Gilbert’s “King Goodheart”, who “wished all men as good as he, so promoted everybody”? Human systems are fallible, which is a good reason for automating [institutionalising] responsibility for making errors good. That, sadly, will not make either us humans or our automata perfect: assumptions questioned in “1984” (Orwell’s anti-King Goodheart alternative to the strife between different personality types in the 1984 of Chesterton’s “Napoleon of Notting Hill”) and exhibited in “most systems thinking” (which takes for granted error correction rather than dwelling on the significance and organisation of it).

    In answer to the first of your questions, then, I am drawing attention to the nature/nurture differences affecting personal inspiration, and the possibility that it can be misguided. I see us needing to “fit” it in to social systems by leaving room for it, while at the same time containing its effects if it proves to be misguided. That goes with appreciating the intuition and hypotheses that Hume and Logical Positive intelligence testers discount and Popper’s philosophy of science fails to explain. However, it also goes with trying out hypotheses locally, and only extending the experiment if it works safely. That is what we actually tend to do, but in a commercial selling rather than local buying context: relying on narrowly “nurtured” specialised experts rather than opening development processes to the intuition and experience of “locals”. (C.f. Chesterton’s “The Outline of Sanity”).

    To cut a long story short, I see a need for a time-sharing society in which most of us do and learn from our period of National Service mass-producing materials for local and mutual production/distribution and land/town/home/self/product maintenance, arts and crafts, along with recycling, research, education, science and development. With the automation of mass production that need involve only a few years before we take on family responsibilities – or occasional shifts away from the wife? The condition of the possibility of that (and the development of a less acquisitive moral order) seems to be the separation of motivation from “earnings” by dividing our already available national surplus into Citizen’s Incomes and Prizes for good work of any sort. (C.f. Ruskin’s “Unto This Last” and “Crown of Wild Olive”).

    Don’t I go on? My apologies. That’s an intuitive’s problem when he has to spell out in words what he can see at a glance.

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