Home > Plutonomy > First Piketty and now Gilens and Page

First Piketty and now Gilens and Page

from Peter Radford

“When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy.” – Martin Gilens & Benjamin Page, ” Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, forthcoming this Fall

Wow. The second shoe drops.

Whilst we are all absorbing the impact of Piketty – and I repeat: go read it before you comment on capitalism henceforth – in come Gilens and Page with a blockbuster paper that shreds any concept that America is a functioning democracy, where by democracy we mean a state whose policies are influenced by popular sentiment.

We are an oligarchy, with a slew of special interest groups providing a supporting cast to an economic elite who manage to direct policy to their advantage. Not always, but often enough to skew society prodigiously. Having established with their research that American policymaking is dominated by an elite, Gilens and Page end:

“Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association, and widespread (if still contested) franchise. But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.”

Double wow.

All of a sudden we have solid research confirming what many of us have been arguing on the basis of simple observation: to all intents and purposes America is an oligarchy not a democracy.

The acid test is that applied by Gilens and Page. Just how often does actual policy match what appears to be majority opinion. The answer they find is that it matches depressingly infrequently. The elite governs on behalf of themselves with the rest of us benefitting only to the extent that our wishes fall into line with those of the elite. If they clash then tough on us.

As it happens the majority and the few have closely aligned interests some of the time. So it can appear, as it did for many years after the Reagan revolution, that the new course for the nation was in all our interests. But that was an illusion. It was a mirage concocted by the convergence of opinions and was not reflective of any substantial power of the majority or resonance with its beliefs. It was a mere coincidence.

And as the Reagan revolution ground the middle class down, abetted by both Bush presidencies and Clinton as well, the preferences of the elite began to diverge from those of the majority. Significantly as it turns out. This was especially true in the Great Recession and is reflected in the enormous influence over subsequent policy. Policies that helped the majority were generally impossible to put in place, whereas policies that assisted the elite were passed in abundance. The only great exception being health care reform, and even there the influence of the elite and business groups made its passage tenuous and its success terribly difficult to achieve.

This fits neatly with the Piketty thesis. So neatly that it is downright scary.

The huge point of all this is that the constant accumulation of ever greater shares of wealth by an elite allows it to exert ever greater power on the political stage. This much is obvious. It has also been overlooked by most analysts of American policy because it was always held as self-evident that America remained a functioning democracy and that the majority had some influence over their own fate. So observed outcomes must, in some way, reflect what the majority “wanted”. Or, at least, this would be the conclusion drawn by those under the misguided thrall of rational theory which holds that our major political parties naturally converge on positions that reflect the majority because that assures those parties of continued power.

Rational theory, of course, never adequately accounts for the real world. It looks pretty, and can be expressed in dynamite formal terms, but is has an unfortunate tendency to miss the efforts of real people. In this case the efforts of an elite to garner a disproportionate amount of power. Perhaps this is because the elite contains many of the academics who propound rational theory.

In any case, the conjunction of the Piketty book and the Gilens and Page paper ought to stir the blood of anyone who values democracy. I know it has my attention.

  1. April 23, 2014 at 12:56 pm

    I read this paper when it became available, found it nice to have some scholarly back-up, yet still wonder why observation presented with pure and concise philosophical analysis is looked down upon and not acted on by the very professors who teach our youth the skills of analytical thought.

    One of my area of economic studies during the time of the invasion of Czechoslovakia was totalitarian economic systems. Using those thought construct patterns to analyze the US leads to the identical place; the US is a totalitarian military government with central planning and a fake democracy that blocks the distributed intelligence and knowledge of the human specie and is thus doomed to fail rather quickly, perhaps even in my lifetime.

    • davetaylor1
      April 24, 2014 at 10:10 am

      Garrett, try my last response to “Paradigm Lost”. (Or Chapter 2 of G K Chesterton’s “Orthodoxy”: http://www.gutenberg.org/ebooks/130). I find it nice to hear someone else “singing the same tune” …

      Apologies in the first for yet another “glaringly obvious as displayed” typo: at 77 “my eyes are dim, I cannot see”. The missing word is of course “different”.

      • April 24, 2014 at 3:24 pm

        Thanks, just downloaded it, my eyes are similar.

  2. robert r locke
    April 23, 2014 at 1:17 pm

    Peter, having convictions confirmed by numbers is nice, but for people who have lived observant lives since 1980, they just amount to “a penetrating glimpse into the obvious.” We need hopeful suggestions about how American public opinion can be effectively mobilized to institute an economic democracy. What books or articles, or people, should we listen to or read to effect that? We need to enter into a penetrating discuss about how change is managed. It won’t be easy. We had the abolitionists before the Civil War. Did they get rid of slavery? We had the Progressive movement at the beginning of the 20th century but it produced managerialism,not democracy. The people most effective in getting change done are the enemies of economic democracy. The system we have today is the result of their post1970 quite efficient transformational work.

  3. aelmak
    April 23, 2014 at 1:26 pm

    Reblogged this on Political Economics Review Blog and commented:
    Nice piece of Peter Radfort: USA is an oligarchy (based on Piketty work and Gilens and page study (2014)).

  4. William Neil
    April 23, 2014 at 2:06 pm

    Peter:

    Thank you for pulling the two together. I’ve read both, and they do reinforce each other. At the end of Piketty’s Washington, DC, Economic Policy Institute appearance, a question from the audience managed to make it through to Piketty and it asked him if he could give weight to the most important issue raised by his work, what would it be…and he answered that the tendency for wealth and income to concentrate had powerful implications for democratic institutions, the political realm.

    May I add a third work also gathering attention as the most powerful re-examination of what the New Deal achieved, and where it left us after the South and the Right’s counter-attack in the late 1930’s. The points I’m going to highlight also speak to Garrett Connelly’s comment. I think totalitarian is too harsh a word, and we don’t have central planning by the government, indeed I’ve heard high ranking Republicans take great pride in the fact that we don’t know where we are going because we are all waiting for the next “big thing” to emerge from the private sector – like fracking, I suppose. Now you can argue that when a direction emerges from the private sector, government policy follows – think of Sec. of State Clinton having set up the energy-gas planning sector inside the State department headed by the former Ambassador to the Ukraine…to make energy more of a US foreign policy instrument…at a time when it is not clear that the citizens domestically think this is a great way to go – look at the stalemate in New York state – how will residents feel when the US gets all the pollution and the gas is LNG’ed and shipped overseas…and domestic prices rise, not fall? I’m not sure this is central planning, instead, please consider the points made in the Epilogue of Ira Katznelson’s “Fear Itself: The New Deal and the Origins of Our Time,” another heavy which comes in at 703 pages, including the Index, to Piketty’s 685.

    Now Katznelson has celebrated the achievement of the early and middle New Deal, especially in leading the US to a more egalitarian economic order and doing so through the legislative process. And that’s where his book breaks new ground on the New Deal, which has been viewed through the glow of the remarkable man and growing power of the office of the presidency of FDR. Katznelson shifts the focus back to the Congressional hallways and committee rooms where the legislation was shaped and voted on…even those bills which granted the president and his new machinery greater power. Up to a point. Thus his work is the detailed historical map of the era in the US – a national illustration of the importance of these years described more broadly by Piketty, and with perhaps P’s greater emphasis on the role of the economic and physical calamities that were WWI ⅈ let me strike the “perhaps,” Piketty does stress the physical destruction and the growth that was fueled by rebuilding over the conscious egalitarian policies which were the New Deal. But Katznelson points out there was an inner, presiding power which set limits on what could be done – the racially conservative Democratic Party of the South, which still had some egalitarian values left over from the days of the populist agrarian revolt when it came to issues of national economic power. It was wary however, of the racial line, which was hard to separate from the labor power line: unionization of the South meant that the racial barriers would come down, (as well as the South’s “cheap labor” advantage in attracting businesses) and the South feared, as it had always done, going back to the days of John C. Calhoun, the power of the national state, made more urgent by the limited planning functions that grew inside the federal bureaucracy during the early and middle days of the New Deal. So the South struck up an alliance with the Republican Right, and the brakes were jammed on.

    So here’s what we inherited, according to Katznelson – from the Epilogue:

    “Replacing the Progressive vision of a strong-minded state that pursued a widely backed common good as the hallmark of a healthy democracy, the domestic state the New Deal created substituted an institutional framework within which political pressure could operate….the only national interest lies in these rules and the habits supporting them. These shape an open democratic game..(editors note: in the minds of the political scientists justifying this system)…the social whole, and with it the idea of a common good based on shared goals, disappeared….

    A state without substance is a state ripe for special interests to grab hold of key elements of government. Although the procedural face of government did not officially recognize particular private interest as more privileged than any others, it effectively reduced the scope of labor as a national class, and in so doing helped enhance the power of capitalist firms and business ideology…. From time to time, efforts have been made to counter the imbalance of money, organization, and access, but unless strong counter pressures can be mobilized, inequality grows, poverty is neglected, and equal citizenship is compromised….with ‘sovereignty..parceled out among the groups’ and with public values trumped by private-regarding goals and power, the procedural state generates recurring crises of public authority and civic trust. Disillusionment and cynicism result when a system declared to be impartial and just by definition is found to be unfair. The result is either too little political participation or episodic and volatile participation by enraged citizens who are convinced that the putatively neutral rules of the are rigged. Once the New Deal’s more assertive projects for managing capitalism ended and the prospects of a national labor movement diminished, both the result of actions by fearful southern representatives, the long-term prospects of American democracy were sharply constrained, and the range of feasible options narrowed to a conservative return to business capitalism or a liberal defense of the fiscal policies the New Deal ultimately fashioned.”

    When you add in more than 30 years of highly ideological neoliberalism to this already faltering structure, I think readers will have less trouble in appreciating the findings of both Piketty and Gilens and Page.

    And Garrett, I’ve skipped the passage on where US foreign policy ends up…but I think you’ll find them to be of great interest, and leaning in your directions, if not quite that far.

  5. Allen Edwards
    April 23, 2014 at 3:40 pm

    An excellent post.

    But is ACA actually a “great exception”? Wasn’t this “reform” made possible by the fact that it strengthens the 1%-owned insurance and pharmaceutical industries? (Real reform, Enhanced Medicare for All, was taken “off the table” at the outset.)

  6. BC
    April 23, 2014 at 6:15 pm

    Spengler predicted that “democracy” would become “rule by money men”, achieve enviable heights of decadence, negligence, and decay, and then economic, social, and political collapse, setting the stage for the rise of militarist dictatorship, nepotism, and increasing brutishness and violence.

    Sarkar foresaw a similar progression to the rule by “Acquisitors” who would eventually co-opt and utilize, but then be supplanted by, “Warriors” following a period of crisis.

    What is described today as “wealth” has increasingly become onerous rentier claims by the top 0.01-0.1% to 1% on wages, production, profits, and gov’t receipts in perpetuity, such that growth of real final sales per capita cannot occur owing to the share of financial claims flowing to the rentier elites.

    The imperial ministerial intellectuals, particularly economists, are well paid and conferred legitimacy and status to rationalize the growth and power of the global rentier militarist-imperialist corporate-state known as the US.

    Moreover, that the top 10% pay 70-75% of all federal and state income taxes, we have a system characterized by “no representation without taxation” in which the top 1-10% perceive taxes as fee for gov’t services (and protection) rendered, not the cost of civilization or civil society that serves the masses. The US gov’t is the “best corporate-state lots of money can buy”.

    Finally, that the corporate-state’s governance is essentially a financial contest for those constituencies that can raise the most money to hire rule makers to write the rules in the buyers’ interest, with now no effective limits on what can be spent to buy legislation, scarcely nothing else matters now apart from the ability and willingness to pay up for the rules one desires to best serve one’s interests at the cost to everyone else.

    The Anglo-American global rentier militarist-imperialist corporate-state is far too large and thus is effectively ungovernable in terms of a popular representative political system. Only the top 0.01-0.1% to perhaps the 1% can afford to compete. Therefore, “the people” no longer include the bottom 99-99.9% of the population.

    Until this is understood by the most clever and well-intentioned members of the bottom 99%, in order to devise alternative self-organizing, mutually beneficial group interests, the system will continue to consolidate financial, economic, legal, political, and institutional power to the top 0.1-1%, whereas the rest of the society will become poorer and effectively without recourse or redress.

    • April 23, 2014 at 9:50 pm

      Unless one can get the 90% of all that have an income to unite.
      Before they vote, they would ask one question.
      Would you support :
      “The new Federal Personal Income Tax :
      Income is to be taxed per individual at the rate of 15% with a
      standard deduction of the first $150,000.”

      YES or NO.?

      Even Obama knows this can be done, everyone knows it can be done.
      (As stated on ” 60 minutes” (12/11/11)”
      President Obama said,”You can’t raise revenues by lowering taxes unless you get the money from somewhere else.” ?

      YES, JUST COLLECT INTEREST ON OUR OWN MONEY, INSTEAD OF TAXES ON INCOME!
      DO FOR OURSELVES WHAT WE HAD ALLOWED THE CENTRAL BANK TO DO FOR THE BANKS (PFPB) !
      LOAN OUR MONEY AND CHARGE (interest) A TAX ON IT.

      AMEND THE FEDERAL RESERVE CHARTER; TURN THE FED RESERVE INTO THE FEDERAL RESERVE BANK OF AMERICA (FRBA),RESTORE MONETARY POWER BACK TO THE PEOPLE ,OPERATE THE FRBA WITH ABSOLUTE TRANSPARENCY, (“GLINDA,the Good Witch, owns a Great Book of Records that allows her to track everything that goes on in the world from the instant it happens.”_The Road to Oz)

      Form a more perfect “capitalistic monetary ” circle: $100 trillion issued as loans to come back as $200 trillion as payment while at the same time as it returns creates $100 trillion in new loans while spending $100 trillion as Congressional appropriations for the benefit of the people.
      With payments of $415 per month on each $100,000 for 20 years, the Central Bank would receive an annual revenue income of $10 trillion per year.
      $5 TRILLION to be turned over to the US Treasury as taxes raised while at the same time make new loans for $5 TRILLION so as to complete the the prosperity circle.
      No inflation or deflation for there is zero change in the capital value of the sovereignty. There is zero change on the balance sheet of the Central Bank; a true zero net change. Whatever the amount ‘entrusted’ to the Central Bank remains that exact amount. Comments by Justaluckyfool ( http://bit.ly/MlQWNs )
      ( “You are always welcome to share, copy, plagiarize, improve, etc..any comments.)

  7. Marko
    April 23, 2014 at 7:43 pm

    Since we’re all too lazy to grab pitchforks and hit the streets , how about we set up a date and time when we’ll stick our heads out the window and scream : ” I’m mad as hell , and I’m not going to take it anymore !! ”

    Then , content that we’ve fulfilled our civic duty , we can go back to blog-crawling.

    • BC
      April 23, 2014 at 8:24 pm

      Marko, your sarcastic wisdom is well placed and appreciated. If you knew my lack of laziness and what I have attempted and its cost to me personally, you might well conclude without a hint of sarcasm that my personal cost was not worth the effort, and that, knowing the price I paid, most people would not bother sticking their heads out of the window to scream anything at all.

      That IS the issue in a hyper-materialistic, hyper-commodified, hyper-financialized economy, society, and culture in which nothing is worthy that cannot be monetized and sold for profit for the benefit of the top 0.1-1% in the aggregate.

      We are, know it or not, prisoners of, i.e., slaves to, the rentier-parasitic system of extraction of labor product, profits, and gov’t receipts for social goods in perpetuity by the top 0.01-0.1% to 1%. The rentier-parasites are untouchables, utterly exempt from public scrutiny of their values, motives, and self-serving machinations.

      The closest historical analogs to today’s concentration of wealth, income, and political power are prior to the French Revolution and the conditions leading to the rise of Bolshevism in Russia and Nazism in Germany. The imperial establishment ministerial intellectual caste members feign “progressivism” while advocating, rationalizing, and affirming the values, expectations, and actions of the extractive parasitic rentier elite top 0.01-0.1%.

      • Marko
        April 23, 2014 at 9:52 pm

        No , BC , I wouldn’t think your actions weren’t worth the effort. I’d offer my thanks and encourage you to stay at it , if you can manage.

        I must admit , though , that I think I’m slowly being infected by whatever it is – hopelessness ? , apathy ? – that keeps the masses in their seats , even as the chair legs are being sawed off from under them..

        One thing I find most distressing is the near-absolute scarcity of people of authority for whom I have even a modicum of respect or confidence. It’s either going to be the average stiffs who rise up and do something , or nothing will get done. And the only average stiffs I see having any impact are the Tea Partiers. Ack!

        In short , I’m pretty bummed , but for now , at least , still plenty pissed-off.

  8. Bruce E. Woych
    April 23, 2014 at 11:20 pm

    Peter: Your articles are hitting the nail on the proverbial head ( “of or pertaining to the head,” from Old French capital, from Latin capitalis “of the head,” hence “capital, chief, first,” from caput (genitive capitis) ” head” …) NICE GOING !!!!!!

    The iron law of oligarchy and the work of Lipset might lend itself to a political democratic managerialism based upon an oligarchic republic (perhaps more technocratic than managerial after the 1970s), but in so defining old terms from industrial democracies we miss the essential transition to financialization, privatization and international globalization processes that concentrates and consolidates regional power into corporatist interests in new ways. New ways that cast shadows that hint of a neo-feudal order and organizational emergence of network economies of scale (with their own concurrent political economies and vested interests aligned towards centralized order).

    Unfortunately, Once again we are obliged to utilize terms that are not precisely defined and we tend to fit our realities into “biased power” terms at best. Considering that an intermittently recognized and acknowledged shadow government of offshore-foundations and an intelligence community that forms the instrumentality of the state; political markets appear to determine the core of our political structure and the periphery is “pegged” in relation to it and in concentric subordination to its primary survival. Hence we end up with an (oligopoly) oligopic plutocracy more than the 20th century industrialists domination by monopolists or the aristocratic forms of descent that lent itslef to the traditional forms of oligarchy itself. Like capitalism, we are left at the disadvantage of a term that acts like a potent classification with many layers, levels and moving parts.

  9. Bruce E. Woych
    April 24, 2014 at 1:27 am

    http://weapedagogy.wordpress.com/2014/04/24/redesigning-economics-education-post-crash-economics-society/#more-394
    By Asad Zaman
    April 24, 2014
    (excerpted introductory quote):
    ““It is time to rethink some of the basic building blocks of economics”. These are the words of Andrew Haldane, Executive Director for Financial Stability at the Bank of England, in his foreword to this report. Economics is in crisis. The profession is under attack from the media, employers and the general public. The economists we are producing are not performing the tasks society demands from them. The Financial Crisis is the obvious example of the current problem but by no means the only one. Worries about climate change are escalating to crisis levels. Massive wealth inequality is creating a backlash from think tanks, journalists and academics alike. Unemployment in Europe and beyond is motivating ordinary people to demand answers from the powers-that-be; the powers-that-be then continually defer to economists to provide these answers.

    Economics, Education and Unlearning looks at what we, PCES, believe to be the problem;
    (read all: with download of report). PCES : Post Crash Economics Society

  10. robert r locke
    April 24, 2014 at 5:41 am

    Lenin, in Imperialism the Highest Stage of Capitalism, claimed that capitalism broke down at it weakest link, meaning in Russia. If you look at capitalism globally, Russia was not in the highest stage of capitalism in 1914, but still in a rather primitive state where the exploitation of the workers was most acute; so the global chain broke in the weakest link where the exploitation provoked the uprising. From there, it was suppose, in a chain reaction, to move back into the heartland, Britain..Germany, America. We spend too much time analyzing the heartland of financial capitalism, not enough at looking at where it is weakest, in the nonAngloSaxon world. Do an analysis of how the overthrow of the system could occur outside the West. To do that you need to know about Historical Specificity, the cultural, social, and political configurations of this world not just wallow around in the West’s playground.

    • April 24, 2014 at 3:03 pm

      Interesting observation, Robert, though I would modernize just a tad, fast forward to the US, where the planned drop in worker wages has been so perfectly managed as to be almost invisible from year to year yet has reached a pain threshold in the living memory of millions.

      Now we see the interesting breakthrough by Gilens and Page with multivariate Model 4, illustrating spectacularly that we the people have virtually nothing to do with governmental policy. Part of the present need for economists is an understanding of real democracy and how it functions in a dynamic living system which so far from equilibrium that it is characterized as evolving.

      The US is perhaps furthest of all nations from what a living generation knows is possible. Gilens and Page have done us a great service yet barely hint at democracy as a tool to focus distributed intelligence as a flow and distributed knowledge as storage during a time when no single individual or group can fully see or comprehend that the existential threat to our species is a strange march to extinction by pollution suicide.

  11. davetaylor1
    April 24, 2014 at 3:33 pm

    Robert, earlier you were asking for “hopeful suggestions about how American public opinion can be effectively mobilized to institute an economic democracy. What books or articles, or people, should we listen to or read to effect that?” You seem to be the answer to your own question! But to continue my “same hymn sheet” line of thought, here we have the historian Marx and the intuitive observer Keynes singing different tunes. Must we have one or the other, or can we have both, arranged in counterpoint?

    I’m currently looking appreciatively at Geoff Hodgson’s erudite “How Economics Forgot History”, which on p.47 cites Marx [ambiguously] saying “It is not the consciousness of men that determines their existence, but their social existence which determines their consciousness”. [Trivially, one must obviously exist to be conscious]. Keynes famously concludes his “General Theory” by contradicting this. “The [habitual] ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. … But soon or late, it is ideas, not vested interests, which are dangerous for good or evil”.

    My own reflections on and observations of behaviour led me to a physiological explanation of consciousness too complex to spell out here in detail, but which can be understood as the emotions [pre-programmed instincts] chemically “tuning in” the neural system until the pattern of [informative] variations in energy inside the senses matches significant variations on the outside. (So, in answer to John Locke [and his solipsistic critic Hume], the outside world doesn’t [need to] force itself into our minds; we adapt ourselves to it). Synaptic growth then creates memories not directly of what we see, but encoded as how the senses need to be attuned in order to be able to see it again (or faintly, powered by electrical noise, as when listening to a crystal set rather than a powered radio). The difficulty is that the memories short-circuit the emotions, so that the familar ceases to register as significant and memories of mental actions are reactivated unconsciously. Genetic differences in the motivational subsystem lead to developmental and memory/blind spot differences as between those still dominated by emotions, those who have become skilled and those with senses predominantly aural or visual. One reads from this that Marx was a reader, Keynes an observer. Marx, like his visually gifted Christian contemporary Ruskin, was rejected because what he was saying was sufficiently unfamiliar to ring warning bells. Keynes’s theory was able to fly in under the radar because (as an illustrious convertee) many economists read him, initially saw what they expected him to say and were hooked before they could avoid his rhetorical bait.

    In answer to your questions then, Robert, I suggest we need to convert someone like the illustrious Krugman, who is already widely read and (as an equilibrist) might be expected to be open to the discovery of a general theory of equilibria which explains what is involved in the maintenance of dynamic equilibria. [In footnotes: that of PID servos].

    • April 24, 2014 at 4:32 pm

      The answer lies in the use of ‘a new powerful weapon’ known as “Social Media”.
      We do not know how long it may be available.
      The problem is: What 140 characters could be agreed as to be used as the basic plank in the platform for reform?

      “Taxation of Issuance to Eliminate Poverty and Secure Prosperity For All.”

      A way and means “…to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”

      • davetaylor1
        April 25, 2014 at 10:57 am

        “What 140 characters could be agreed as to be used as the basic plank in the platform for reform?”

        Marx’s 68 character “To each according to their need, from each according to their ability” is not far off, and in the right order.

        Perhaps make it “IOUs to each according to their need; self-care and mutual service expected from each according to their ability; accounts for each of debts, write-offs and honours”?

      • April 25, 2014 at 4:49 pm

        davetaylor1, “Perhaps make it “IOUs to each according to their need; self-care and mutual service expected from each according to their ability; accounts for each of debts, write-offs and honours”?
        Could we begin the ‘chess square’ with 2 agreed on :

        “A living standard to each according to their need;self-care and mutual service expected from each according to their ability.”

      • davetaylor1
        April 26, 2014 at 11:27 am

        Justalucky, thanks here for agreeing my second clause, and indeed, for your very helpful challenge.

        The reason I am saying IOU’s is to stress the reality of what money is: in fact a token of debt as created and a measure of it and of resources acquired from others when used in assembling an adequate “living standard”.

        The reason I am wanting the honest equivalent of bank accounts is to remind us of our life history, wherein we start off life indebted to our parents, then our educators, then to the often anonymous multitude who maintain and share the resources of our society; that these debts get written off if we do what gratitude prompts or at least what justice expects, and that we are appreciated when we contribute or share (whether from more or less) beyond the call of duty. [Cf. Ruskin’s olympian “Crown of Wild Olive”]. When our accounts go into the black, that should only represent an honourable surplus available to us for giving away or distributing via trade.

    • robert r locke
      April 25, 2014 at 7:39 am

      Dave, Assad Zaman notes that Geoff Hodgson in “How Economics Forgot History,” says that “theories have to be specific to social, cultural, context.” According to Einstein “It is the theory that decides what can be observed.” If Einstein is right, then the theoretical assumption of mainline economics decides what we can observe or even see. You say that Keynes famously concludes his “General Theory” by agreeing with this: “The [habitual] ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. … But soon or late, it is ideas, not vested interests, which are dangerous for good or evil”.

      So where does that leave Hodgson’s emphasis on Historical Specificity? My own approach, when framing historical research is to begin with it, not with theory. I begin with a question or a puzzle, e.g. Why did Germany replace France as the leading European power in the 19th century? Then I consult people who lived in the nineteenth century (engineers, statesmen, journalists) to see what they said about the subject. Then I read secondary sources. I quickly discovered that the question of economics came up right away in the form of comparative industrialization. All this took about a decade of research in three countries, France, Germany, and Britain. Then in the late 1970s I ran into the New Economic Historians, who were revising, using neoclassical economic theory and econometric methods, the view that French and British entrepreneurialism flagged or failed, and so threw out what everybody else was saying to the contrary in the 19th century. It was a classic case of “theory deciding what can be observed.” Since I had armed myself with a lot of Historical Specificity,” I used it in a book published in 1984, and reissued in 2006 (The End of The Practical Man). Mine was a reminder that theories have to be specific to social, cultural context. I’ve been using this approach ever since.

      • davetaylor1
        April 25, 2014 at 11:55 am

        Robert, despite Geoff’s assumption, theories don’t have to be specific. There is the dynamic equivalent of Russell’s “set of all sets”: “the context of all processes”, imaginable as the wiring of a general purpose computer whatever the actual processes which are now or have been running in it”, or a multiplexed fibre optic transmission line via which any the process on the internet can be accessed on-line. Imagine the universe as an earth-shaped bubble and latitude/longitude coordinates in the form of tunnels down which via any point on the [current] surface can be reached via so much up or down and so much across. That’s effectively the theory of indexed logic: things represent (i.e. are theories of) themselves, so if you want a specific theory, it is to be found in the place where it is. Go and look at it!

        This from the Algol68-R User’s Guide, edition 1, 1972: “It is well to recognise from the outset that the role of a variable in a computer program is different from [?] its role in mathematics. A variable is treated as a receptacle for holding an object of some kind. It is crucially important to distinguish between the receptacle and the object held within it”.
        Likewise Shannon, when you study what he is doing. His information doesn’t contain meaning. It gives you words you can look up in a dictionary.

        My own approach to history I suppose began with the Biblical time-time, but being visual it is mainly triggered by [industrial?] archeology, so the questions tend to follow the lines: how old is that ruin, how did it get built, and what could they have known then which enabled them to build it. Steam trains used to be little. Why? Because at the time they were invented they only knew how to make cast iron and cast iron rails break easily in stress. Etc. etc.

  12. robert r locke
    April 25, 2014 at 1:00 pm

    Dave, #21l ” how old is that ruin, how did it get built, and what could they have known then which enabled them to build it. Steam trains used to be little. Why? Because at the time they were invented they only knew how to make cast iron and cast iron rails break easily in stress. Etc. etc.
    To answer these questions could not be done without an exercise in Historical Specificity, which is acquired by getting into the sources.

    • davetaylor1
      April 25, 2014 at 1:48 pm

      Exactly; the fact that one theory (that of a universal logic) is not Historically Specific does not mean that all the rest (or even the story of the development of the one) are not. My point in the third paragraph, however, is in book terms that I tend to use what’s on the page as the key to related terms in the index, and those to pages on which there are more terms to be accounted for, rather than the other way round. A visual thinking ideosyncracy?

      • davetaylor1
        April 26, 2014 at 12:00 pm

        As an afterthought, Robert, I’ve realised I’m often drawn to the original meaning of words by focussing on subgroups, eg prefixes and endings, in the pattern of their phonic symbols, not just looking up etymological dictionaries to find these meanings but trying to imagine the reason for assembling these compound words in societies in which they lived. Compare that with moderns looking for “what everyone agrees on” in current statistics of citations and usage sampling. Most significantly different here are ‘eco-nomics’ meaning “home customs”, and ‘re-ligion’ meaning “bound again”, which only makes sense in the Christian context of having been freed [from sinful – i.e. misdirected – custom] and [like Robinson Crusoe’s Man Friday] freely committing oneself to the one who saved you. We could do with a bit of the latter today. The former suggests that what we have now, whatever it is, is not economics. (Soddy’s chrematistics comes to mind).

  13. Al
    May 1, 2014 at 5:01 am

    I will admit that a lot of the discussion in these comments goes over my head. I am not a student of economics and only a casual observer of philosophy. Indeed, most philosophy is beyond my understanding except that which appears to me to restate conclusions that I have already reached through my own processes. I am, however, able (or think I am able) to identify the basic theses of several of the commenters here and they (the theses) appear to me to still fall within the capitalism/communism dichotomy which, I submit, is a false one. Capitalism presupposes that the consolidation of wealth can go on indefinitely while communism (or socialism, if you prefer) presupposes that the redistribution of wealth can go on indefinitely. Neither of these is sustainable, at least not if the goal of economics if the meaningful advancement (or evolution, if you will) of human civilization. This is because competition is the driver of all evolution and both indefinite consolidation and indefinite redistribution are intrinsically anti-competitive. This is the case because individuals will generally avoid competition unless driven or enticed to it. This competition aversion is plainly demonstrated by the consolidators of wealth who use it to create a system that puts their wealth beyond the reach of other potential competitors. While it is true that these people have been the most successful competitors in the past (or, more and more often these days, are the descendants of successful competitors) the political goals they seek would insulate them from competition in the future.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.