Political Economy

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U.S. Economy: Saved by Immigrants

Published by Anonymous (not verified) on Sun, 24/03/2024 - 8:42am in

The pickup in U.S. growth last year came from a sharp rise in net immigration. In simple terms, more workers generate more goods and services.

Read more ›

The post U.S. Economy: Saved by Immigrants appeared first on New Politics.

Lecturer in Political Economy (Education Focused)

Published by Anonymous (not verified) on Tue, 19/03/2024 - 10:09am in

The University of Sydney welcomes applications for the position of Lecturer in Political Economy (Education Focused) (Level B)

The position is based at the School of Social and Political Sciences and will significantly contribute to the Discipline of Political Economy’s pluralist, heterodox and interdisciplinary program of political economy teaching and learning at both undergraduate and postgraduate levels. The appointee will also conduct research in their field of study and/or in pedagogical practice, design and evaluation, and contribute to educational and other leadership and governance priorities in SSPS.

Full information about the role and application process is available on the University of Sydney’s Careers Website.

The post Lecturer in Political Economy (Education Focused) appeared first on Progress in Political Economy (PPE).

Dr. Pangloss’s Panopticon

Published by Anonymous (not verified) on Wed, 28/02/2024 - 12:38am in

So Noah Smith has a quite negative review of Acemoglu and Johnson’s recent book, Power and Progress, a book that I myself liked very much. Before letting rip, Noah says nice things about Acemoglu and Johnson, and I’ll do the same here for him. There are a lot of people on the left who detest Noah, but I know him to be a genuinely decent person. What he says of Acemoglu and Johnson is what I’ll say about him – his heart is in the right place. Sometimes … he does not go out of his way to make himself lovable to lefties, but as someone who has been known to get involved in stupid and tendentious spats on the Internet myself, I’m in no position to heave rocks at glasshouses. What I do think (and I’ve said more or less this to him in person – my views won’t come as news) is that Noah represents a style of economics that has an overly Panglossian view of power, economics and progress.

For those who haven’t read Voltaire’s novel Candide, Dr. Pangloss is the parodic Enlightenment thinker who keeps on insisting that everything is for the best in the best of all possible worlds, as disaster and catastrophe unfold around him. To make an even more labored Enlightenment joke, Noah’s style of economics has a blind spot about panopticons. Acemoglu and Johnson represent a different understanding of economics, which doesn’t (in my view) have the same blind spot, and indeed has set out over the last several years to correct it. Political scientists like myself have their own blind spots – but for obvious reasons, I am not the right person to ask what they are! So consider this, if you like, an effort to remove the mote from my brother’s eye, while ignoring the whopping beam in my own.

My operation in mote removal will not engage Noah’s lengthy critique of the historical details of Acemoglu and Johnson’s book or the labor/automation debate among economists. In a couple of cases, Noah seems to me to be right (e.g. Henry Ford’s attitude to unions), and I imagine Acemoglu and Johnson can respond much better than I can to the rest, if they care to. What I am going to focus on is Acemoglu and Johnson’s account of power, and why Noah finds it, in his own description, bewildering. Noah just doesn’t understand what they are saying about power. This leads him to provide a very incomplete account of their actual, broader argument. And that is connected to economists’ obliviousness about panopticons. I’ll talk about each in turn.

Power

Noah says that Acemoglu and Johnson’s

entire chapter on power and persuasion left me bewildered. I do not understand why we should put accidental success in a nonviolent marketplace of ideas in the same conceptual category as chattel slavery and feudalism. [all Noah’s italics]

He suggests that Acemoglu and Johnson’s argument is both impossibly capacious and intellectually incoherent:

it’s clearly true that technology can be used to benefit average people or to hurt them. But how does society choose how to use technologies? Acemoglu and Johnson’s answer is “power”, from which they get the title of their book. But what is power? Here, in Chapter 3, Acemoglu and Johnson deploy a definition that veers into the tautological:

Power is about the ability of an individual or group to achieve explicit or implicit objectives. If two people want the same loaf of bread, power determines who will get it.

Using this definition, how could we ever conclude that power wasn’t the reason for an observed outcome? Two people want a loaf of bread, and one of them gets it; we know this was due to “power”, because “power” is defined by who gets a loaf of bread. This kind of definition is semantically valid, but empirically useless; if you define “power” such that it simply means “whatever caused an outcome to happen”, you haven’t isolated causality, you have simply given it a new name.

Acemoglu and Johnson have a reason for employing a definition this infinitely broad; it allows them to include persuasion and compulsion in a single category of “power”.

It isn’t unreasonable for Noah to want to know how to identify power when he sees it. Nor is it unreasonable for him to note that social scientists find it hard to prove that power inequalities caused this or that outcome, when the power dynamic doesn’t come out of the barrel of a smoking gun.

However, the fact that causation is really hard to isolate for certain social phenomena does not, ipso facto, mean that they lack causal force. And Noah muddles the two when he lurches from the (correct) claim that it is often hard to disprove power-based explanations, to the (completely wrong) claim that Acemoglu and Johnson’s notion of non-coercive power reduces down to accidental success in the marketplace of ideas.

What Acemoglu and Robinson are saying is something quite different than what Noah depicts them as saying. For sure, they acknowledge that persuasion has some stochasticity. But they stress that it is not a series of haphazard accidents. Instead, under their argument, there are some kinds of people who are systematically more likely to succeed in getting their views listened to than other kinds of people. This asymmetry can reasonably be considered to be an asymmetry of power.

Under this definition, power is a kind of social influence. Again, it is completely true that it is extremely difficult to isolate social influence from other factors, proving that social influence absolutely caused this, that, or the other thing. But if Noah himself does not believe in the importance and value of social influence, then why does he get up in the morning and fire up his keyboard to go out and influence people, and why do people support his living by reading him?

I imagine Noah would concede that social influence is a real thing! And if he were actually put to it, I think that he would also have to agree to a very plausible corollary: that on average he, Noah Smith, exerts more social influence than the modal punter argufying on the Internet. Lots of people pay to receive his newsletter; lots of other people receive it for free. That means that he is, under a very reasonable definition, more powerful than those other people. He is, on average, more capable of persuading large numbers of people of his beliefs than the modal reply-guy is going to be.

This understanding of power is neither purely semantic nor empirically useless. Again, it may be really difficult to prove that Noah’s social influence has specific causal consequences in a specific instance. But the counter-hypothesis – that Noah’s ability to change minds, given his umpteen followers, is the same as the modal Twitter reply guy – is absurd. Occasionally, random people on the Internet can be temporarily enormously influential. Sometimes, super prominent people aren’t particularly successful at getting their ideas to spread. But on average, the latter kind of people will have more influence than the former. We can reasonably anticipate that people with lots of clout (whether measured by absolute numbers of followers, numbers of elite followers, bridging position between sparsely connected communities or whatever – there are different, plausible measures of influence and lively empirical debates about which matters when) will on average be substantially more influential than those with little or none. This means, for example, that it will be very difficult for ideas or beliefs to spread if they are disliked by the highly connected elite.

Now in fairness to Noah, Acemoglu and Johnson don’t help their case by using a wishy-washy seeming term like “persuasion.” But if you think about “persuasion” as some combination of “social influence” and “agenda control,” you will get the empirical point they are trying to make.

Finally, as Acemoglu and Johnson mention in their bibliographical essay, there is some quite solid empirical research – and by economists too! – explaining situations in which social influence has been very consequential indeed! Specifically, Elliott Ash, Daniel Chen and Suresh Naidu FOIA-ed the hell out of George Mason University, and put the results together with other data. They wanted to discover what happened when right wing foundations paid for judges to attend seminars in nice resorts, with great food and drink, where they listened to Milton Friedman and his mates explaining The Virtues of Free Markets, the Evils of Government Regulators, the Benefits of Chicago School Antitrust Doctrine, and the Healthy Incentives Provided by Harsh Criminal Sentences.

The evidence shows, unsurprisingly, that the judges were influenced! Not only were there measurable long term consequences for the judges’ decisions after they were wined and dined but there were secondary consequences, via social influence osmosis, for other judges whom the first set of judges worked with.

Noah suggests that we live in a thriving “marketplace of ideas.” Ash et al. focus in contrast on ideas of the marketplace, and how they are reshaping U.S. society. Do hold onto their findings about judges: we’ll return to them later.

Argument

Of course, Acemoglu and Johnson’s aren’t just arguing that ideas have consequences in general. They are worried about some very specific ideas. As Noah rightly notes, they are unhappy with Silicon Valley’s “techno optimism.” But they don’t push back against progress in general. Instead, they tell us that we can’t just opt for progress and sort out the distributional implications post hoc.

As they themselves put it:

People understand that not everything promised by Bill Gates, Elon Musk, or even Steve Jobs will likely come to pass. But, as a world, we have become infused by their techno-optimism. Everyone everywhere should innovate as much as they can, figure out what works, and iron out the rough edges later.

So how is it that Musk et al. have persuaded people to the contrary? According to Noah, Acemoglu and Johnson say that “silver-tongued technologists managed to persuade American society to weaken pro-worker institutions” but have no real theory of how this happened. Instead, in Noah’s account, Acemoglu and Johnson “just sort of shrug and put it all down to luck. For some reason, the techbros just wrote really good posts, and by doing so they ruled the world.”

This is both spicy and very, very wrong. Power and Progress is not, actually, constructed around the Proof From Excellent Techbro Poasting. Instead, as per the last section, it is about the structural reasons why some people have more power to influence than others. In Acemoglu and Johnson’s own, actual words:

Economic and political institutions shape who has the best opportunities to persuade others. The rules of the political system determine who is fully represented and who has political power, and thus who will be at the table. If you are the king or the president, in many political systems you will have ample influence on the agenda—sometimes you can even directly dictate it. Likewise, economic institutions influence who has the resources and the economic networks to mobilize support and, when necessary, pay politicians and journalists.

It’s silver, rather than silver tongues, that’s doing the work. Or as Piketty puts it pungently elsewhere:

We know something about billionaire consumption but it is hard to measure some of it. Some billionaires are consuming politicians, others consume reporters, and some consume academics.

Network ties matter too:

Wall Street’s broader social network helped in its agenda setting because it encompassed many of the other people who had a say regarding what should be on the agenda. The revolving door between the financial sector and officialdom played a role, too. When your friends and former colleagues are asking you to see the world in a particular way, you pay attention.

Finally, Acemoglu and Johnson repurpose some arguments from cultural evolutionary theory to explain why widely celebrated elites are likely to be more influential even apart from their silver-plated megaphones and contact books. Our capacities for social intelligence lead us to imitate and be influenced by those who seem to us to be successful (I don’t know which particular source in the literature they’re drawing on, but if you’re interested in this general set of arguments, you can’t go wrong by starting with Boyer’s Minds Make Societies).

The result is that economic inequality tends on average to compound into political inequality, and inequality of social influence, in a kind of feedback loop. And even the feedback has feedbacks! Just as social influence is magnified by economic clout, so too social influence can translate into economic and political benefits. As Acemoglu and Johnson say in a crucial passage:

persuasion power generates strong self-reinforcing dynamics: the more people listen to you, the more status you gain and the more successful you become economically and politically. You are thus enabled to propagate your ideas more forcefully, amplifying your power to persuade and further boost your economic and political resources. This feedback is even more important when it comes to technology choices. The technological landscape not only determines who prospers and who languishes, but it also critically influences who holds social power. Those enriched by new technologies, or whose prestige and voice are magnified, become more powerful. Technological choices are themselves defined by dominant visions and tend to reinforce the power and status of those whose vision is shaping technology’s trajectory.

There are long standing battles about feedback processes within the profession of economics. Many economists – in particular right-leaning economists – Do Not Like increasing returns processes because they mess up a lot of the economic standard arguments for market efficiencies. But at this point, I think that most reasonable economists accept that feedback helps explain how some trajectories of technological progress get locked in, and why some get locked out. So Acemoglu and Johnson take that one step further, arguing that technological trajectories are shaped by political and social feedback in ways that will magnify the influence of elites, absent strong countervailing forces.

This is not stupid, and everyday experience suggests that Acemoglu and Johnson are right on the mark. Noah has spent quite a lot more time in Silicon Valley than I have. I’d be startled if he hasn’t repeatedly seen punters fawning over self-evidently idiotic ideas propounded with great confidence by Silicon Valley founders and VC stars. I’ve seen a remarkable amount of this meself – and I’m only in SV occasionally (of course, Washington DC, where I live, has its own versions of this pathology). One of the great virtues of Margaret O’Mara’s fantastic history of Silicon Valley, is that it discusses how hype and lobbying as well as technological advances helped get Silicon Valley up and running.

As I read it, this dynamic is the engine that drives Acemoglu and Johnson’s book – but it doesn’t feature at all in Noah’s summary. Nor does Noah have anything to say about their proposed broad alternative.

Succinctly, Acemoglu and Johnson want MOAR equality and MOAR democracy. The first borrows from J.K. Galbraith’s notion of countervailing power:

We need to reshape the future by creating countervailing forces, particularly by ensuring that there is a diverse set of voices, interests, and perspectives as a counterweight to the dominant vision.

The second derives from a more recent body of findings about problem solving and social cognition, which I and various co-authors have also drawn from.

There is also another reason for democratic success: cacophonous voices may be the greatest strength of democracy. When it is hard for a single viewpoint to dominate political and social choices, there are more likely to be opposing forces and perspectives that undercut selfish visions imposed on people, regardless of whether they want them or benefit from them.

and

The democratic advantage may not be just the aggregation of separate views, but rather the encouraging of diverse perspectives to engage with and counterbalance each other. The strength of democracy is thus in the deliberation among different viewpoints, as well as in the disagreements that this often generates. Hence … a major implication of our approach is that diversity is not a “nice to have” feature; its presence is necessary to counteract and contain the overconfident visions of elites. Such diversity is also the essence of democracy’s strength.

There are bits of their argument that I disagree with, and the final chapter isn’t very satisfying (such chapters almost never are). But I still agree with lots! And my own likely biases lead me to believe what you most need to understand about this book is what largely gets left out of Noah’s review of it.

Acemoglu and Johnson’s core claims, as I read them are:

  1. That the debate about technology is dominated by techno-optimists [they actually write this before Andreessen’s ludicrous “techno-optimist manifesto” but they anticipate all its major points].
  2. That this dominance can be traced back to the social influence and agenda setting power of a narrow elite of mostly very rich tech people, who have a lot of skin in the game.
  3. That their influence, if left unchecked, will lead to a trajectory of technological development in which aforementioned very rich tech people likely get even richer, but where things become increasingly not-so-great for everyone else.
  4. That the best way to find better and different technology trajectories, is to build on more diverse perspectives, opinions and interests than those of the self-appointed tech elite, through democracy and countervailing power.

Since I more or less endorse all these claims (I would slightly qualify Claim 1 to emphasize mutually reinforcing pathologies of tech optimism and tech pessimism), I think that Power and Progress is a really good book, in ways that you won’t understand if you just relied on Noah’s summary of it (I note that this book and my own with Abe Newman are both shortlisted for a very nice prize, but that is neither here nor there in my opinion of it). I haven’t read another book that lays out this broad line of argument so clearly or so well. And it is a very important line of argument that is mostly missing from current debates. Noah speculates that the book hasn’t gotten much attention because it is lost amidst the multitudes of tech pessimistic accounts. My speculation is that it has gotten less attention than it deserves because reviewers and readers don’t know quite how to categorize it, given that it approaches the issues from an unexpected slant.

Panopticon

So, I’ve made it clear that I like Noah. I’ve also spent a couple of thousand words explaining at great length why I think he is very badly wrong in his understanding of Acemoglu and Johnson, and what is at stake in current debates over Silicon Valley. Now, I want to speculate about why he is so bewildered (again: his own word) by Acemoglu and Johnson’s argument.

Let’s start with another question that clearly perplexes Noah – why Acemoglu and Johnson “explicitly try to rehabilitate the original Luddites,” and argue that these Luddites “were right to worry about knitting frames decimating their livelihoods.” So let’s ask a Luddite for the answer! From Power and Progress:

The Luddites themselves seem to have understood not just what the machines of the age meant for them but also that this was a choice about how to use technology and for whose benefit. In the words of a Glasgow weaver, “The theorists in political economy attach more importance to the aggregate accumulation of wealth and power than to the manner of its diffusion, or its effects on the interior of society.”

The Glasgow weaver still has a point, some two centuries later. Many “theorists in political economy” still attach importance to the collective accumulation of wealth and power, without inquiring closely how it is distributed, or what second order consequences it may have for society. Acemoglu and Johnson are, of course, themselves political economists, but they look to push back against some of the main tendencies in the field.

Economists – including Noah according to my estimation – who are fondly attached to those main tendencies, accordingly find it hard to understand Acemoglu and Johnson style arguments, let alone accept them. In fairness to Noah, this is likely exacerbated by the form of presentation: popular books don’t pull together the arguments in the explicit ways that economists are used to. Hence, it is easier (I think) for a semi-outsider like myself to fill in the blanks than it is for someone who is drenched in the common assumptions that Acemoglu and Johnson want to move away from.

There are two parts to the Glasgow weaver’s complaint. One is a distributional concern: in their words, economists usually pay more attention to aggregate social benefits than how those benefits are diffused to particular groups in society. They all too readily leap from a broad utilitarian-philosophical claim – that we ought maximize on some notion of the general social benefit – to the empirical assumption that if we maximize aggregate benefits at time t1 we can expect that the distributional problems will sort themselves out in some proximate future period, t2. More crudely put: they assume that if you let ‘progress’ rip right now, the particulars of who gets what will sort themselves out in some broadly acceptable way in the future.

But if Acemoglu and Johnson are right, this style of thinking does not make sense. If (a) there are different technological trajectories, (b) these trajectories have long term distributional implications (they lock in economic patterns of who gets what), and (c) this in turn affects the distribution of political and social power, then you can’t assume that these problems will sort themselves out in some fair and equitable fashion in the long run. They will not: instead, whatever solutions are created in the future will reflect inequities that are being generated today.

That, I think, is why Acemoglu and Johnson are so keen on having these questions decided democratically through processes that allow ordinary people to have some countervailing power against elites. The downside of democracy is that it is slow, conflictual, and a massive pain in the arse. The upside is that it allows people with different interests to defend their interests, and to collectively draw on diverse understandings of the world for a more complex mapping of plausible future developments. And when you are making decisions that may set patterns in stone for very long periods of time, you really want those who are affected by these decisions to have a say.

The second part of the weaver’s complaint is a social concern – that maximizing on aggregate wealth and power may have adverse effects for society, and may hurt some groups particularly badly. This of course, fades into the distributional problem, but it has some broader consequences too. Polanyi’s understanding of society, for example, descends in some important ways from the weaver’s critique. And again, there is an unfortunate tendency in the mainstream of economics towards a callous calculus of the ultimate good, in which the travails of those who suffer through economic adjustments are regarded as sad, in some abstract and generalized way, but a necessary cost of building a better world that will manifest itself at some hazy point in the future. At the extreme, this can turn into statements like Nassau Senior’s infamous quip that the Irish famine “would not kill more than a million people, and that would scarcely be enough to do much good.”

Acemoglu and Johnson are not responding to sentiments as vile as those of Nassau Senior. But I suspect that they are familiar with the attitude of much of their profession to workplace innovations that seem to improve ‘efficiency’ at the expense of making workers’ lives worse. This, I think, is why they invoke the metaphor of the panopticon early, and return to it, explicitly or implicitly, throughout. I would guess that most readers are familiar with the notion of the panopticon – a system with a central surveilling point that can overlook the activities of myriads of subjects. If you are concerned with power in the workplace, as Acemoglu and Johnson are, then the panopticon is a potent metaphor for the nexus where economic claims for efficiency may justify terrible things.

The idea springs from the same improving tradition as classical economics, and the assumption that prosperity and efficiency are intertwined to the point that they are effectively indistinguishable. Jeremy Bentham, who came up with the idea of the panopticon, was a key figure in utilitarian philosophy and a kind of proto-economist:

Samuel’s idea was to enable a few supervisors to watch over as many workers as possible. Jeremy [Bentham]’s contribution was to extend that principle to many kinds of organizations. As he explained to a friend, “You will be surprised when you come to see the efficacy which this simple and seemingly obvious contrivance promises to be to the business of schools, manufactories, Prisons, and even Hospitals.…”

The panopticon may indeed have efficiency benefits. People can get away with far less slacking, if it works as advertised. But it also comes with profound costs to human freedom. And the technologies that are at the heart of the book’s argument – machine learning and related algorithms – bear a strong and unfortunate resemblance to Bentham’s panopticon. They too, enable automated surveillance at scale, perhaps making hierarchy and intrusive surveillance much, much easier and cheaper than they used to be. As Acemoglu and Johnson note:

The situation is similarly dire for workers when new technologies focus on surveillance, as Jeremy Bentham’s panopticon intended. Better monitoring of workers may lead to some small improvements in productivity, but its main function is to extract more effort from workers and sometimes also reduce their pay

This is, I think, why Acemoglu and Johnson worry that machine learning might immiserate billions, another claim that Noah finds puzzling. Acemoglu and Johnson fear that it will not only remake the bargain between capital and labour, but radically empower authoritarians (I think they are partly wrong on this, but that authoritarian machine learning could instead lead to a different class of disasters: pick yer poison).

And algorithms, including machine learning algorithms, are having more immediate consequences within the U.S. workplace, as illustrated by this Bloomberg article on Amazon’s work practices. There are, for sure, efficiencies, of the sort that Bentham predicted, and a pay bonus that is in some ways reminiscent of Henry Ford’s (again: Noah is right about Henry Ford).

Rather than making the customer wait, Flex drivers ensure the packages are delivered the same day. They also handle a large number of same-day grocery deliveries from Amazon’s Whole Foods Market chain. Flex drivers helped keep Amazon humming during the pandemic and were only too happy to earn about $25 an hour shuttling packages after their Uber and Lyft gigs dried up.

But the efficiencies come at a stark human cost:

the moment they sign on, Flex drivers discover algorithms are monitoring their every move. Did they get to the delivery station when they said they would? Did they complete their route in the prescribed window? Did they leave a package in full view of porch pirates instead of hidden behind a planter as requested? Amazon algorithms scan the gusher of incoming data for performance patterns and decide which drivers get more routes and which are deactivated. Human feedback is rare.

… former Amazon managers … say the largely automated system is insufficiently attuned to the real-world challenges drivers face every day. Amazon knew delegating work to machines would lead to mistakes and damaging headlines, these former managers said, but decided it was cheaper to trust the algorithms than pay people to investigate mistaken firings so long as the drivers could be replaced easily. …

Inside Amazon, the Flex program is considered a great success, whose benefits far outweigh the collateral damage, said a former engineer who helped design the system. “Executives knew this was gonna shit the bed,” this person said. “That’s actually how they put it in meetings. The only question was how much poo we wanted there to be.”

Nobody particularly wants to work in an environment where algorithms are perpetually surveilling them, deciding whether they are hired or fired, with little or no recourse to human decision makers. From the perspective of management, algorithmic bedshitting is wonderfully efficient! It costs less, and is much less of a pain in the ass. And if drivers have to piss into bottles in their vans because they fear being punished by the algorithms, then so be it. This is a cost that they pay, not investors, nor managers, nor customers. Of course, human beings who care about fairness and dignity and such are likely to have a different sets of responses.

Economists, of course, are caring human beings too. But their professional dispositions may partly cut against their caring instincts, in much the same way e.g. as realist scholars in my own discipline may stifle their outrage against humanitarian catastrophes in the belief that ignoring them is to to the greater good. Perhaps, from some ethical perspectives, they are not wrong – there are a lot of look-to-the-future utilitarians out there, even if their reputation has been dented by the travails of Sam Bankman-Fried. But they are also likely to systematically underemphasize certain hurts in their understandings of the world.

Redressing such blind spots is part, I think, of what Acemoglu and Johnson want to do. Their book is written to put these questions at the center of debate rather than shoving them off to the side. They want to rescue Amazon Flex workers from the enormous condescension of futurity, and, for that matter, of the economics profession. And this is what I would love Noah to get. He is neither stupid nor evil. Nor is he unique – I think he is representative of a considerable number of economists! But not all, and there should be fewer.

Understanding Acemoglu and Johnson’s project seems really important to me. Talking, as Noah does in his review about how income inequality seems to be less of a problem right now given hot labor markets, misses their point. It is immediately unconvincing as a rejoinder to Acemoglu and Johnson’s claims about AI/automation, but more profoundly, it fails to acknowledge the difficulties that workers have had in turning this temporary market advantage into enduring structural power. If workers had unions, they could bargain over labor conditions, and push back against their workplaces being turned into automated Benthamite dystopias. That is the kind of politics that Galbraith meant to encourage with his discussion of countervailing power. And that is what Acemoglu and Johnson want to build today.

But building it is vastly harder than it ought to be, in part because of all that social influence that went into persuading judges of the joys of Law and Economics. Just a couple of weeks ago:

In the latest sign of a growing backlash within corporate America to the 88-year-old federal agency that enforces labor rights, Amazon argued in a legal filing on Thursday that the National Labor Relations Board was unconstitutional. … Amazon’s filing was part of a case before an administrative judge in which labor board prosecutors have accused Amazon of illegally retaliating against workers at a Staten Island warehouse known as JFK8, which unionized two years ago. … Wilma Liebman, a chairwoman of the labor board under President Barack Obama, called the arguments by Amazon and SpaceX “radical,” adding that “the constitutionality of the N.L.R.B. was settled nearly 90 years ago by the Supreme Court.”

Amazon believes it might get away with this, because the agenda has been set in just the ways that Noah finds bewildering. This is the result of decades of effort to reshape judicial thinking, along the lines that Ash, Chen and Naidu document. And it is paying off. There are people in Silicon Valley who not only like this agenda, but want to press it in further and more radical directions. According to e.g. Rob Reich, democracy itself is an unappealing notion to many key people in Silicon Valley. The trajectory of technology, politics and growth that they want to direct us toward is not one that I actually want to be on. And I suspect that if Noah thinks about it a little, it isn’t one that he wants to be on either. There are, indeed, parts of his response to Acemoglu and Johnson that suggest as much, and that indeed provide useful ideas to build on.

So I really, really want economics to move in the direction that Acemoglu and Johnson suggest, abandoning the Pangloss-meets-Panopticon vision at the heart of much classical political economy. Perhaps we are indeed in the best of all possible worlds, a thriving marketplace of ideas where the rich and the poor alike can aspire to accidental success in persuading judges of their views on workplace oppression! But I suspect not. Having economists thinking more systematically about the political, economic and technological conditions that would underpin a genuine and shared long term trajectory of abundance and prosperity would be a very good thing.

I do think that the profession is moving, albeit slowly. A decade ago, there were ferocious blogospheric debates about left neo-liberalism. This was a different version of the fight over whether we could just solve for progress and economic growth and assume that the distributional issues would somehow take care of themselves. I found myself on the opposite side of some very sharp disagreements with Noah’s podcast-mate and intellectual partner, Brad DeLong. I am not at all sure that we’d find ourselves on the opposite sides now, and if we did, at the least, I think we’d be able to debate each other more clearly and usefully than we did back then. So too, if Noah goes back and re-reads Acemoglu and Johnson’s book, this time with clearer signposts towards their actual argument, I think that he’d be in a much better place to contribute to this debate.

Update: See also Bill Janeway’s review, which gets much deeper into the history, and makes a broadly complementary argument.

[Reposted from Substack]

How the Battle of the Sexes sheds light on the battle of the sexes

Published by Anonymous (not verified) on Tue, 13/02/2024 - 1:38am in

If you’ve studied game theory, you’ve probably come across the mixed-motive coordination game, a simple one-shot game in which two representative actors have to figure out how to coordinate so as to find a mutually beneficial equilibrium – but have different interests over which equilibrium they choose. And if you studied it a couple of decades ago, you very likely have heard it referred to as “the battle of the sexes,” a term that has fallen out of common usage, for obvious reasons. But when I read Tyler Cowen’s short piece on the actual historical struggle between women and men for recognition, I was immediately was reminded of Jack Knight’s argument, based on mixed-motive coordination games, for why power is more important to the emergence of social rules than most economists think.

Tyler’s brief claim is as follows:

It’s interesting to think of Mill’s argument as it relates to Hayek. So Mill is arguing you can see more than just the local information. So keep in mind, when Mill wrote, every society that he knew of, at least treated women very poorly, oppressed women. Women, because they were physically weaker, were at a big disadvantage. If you think there are some matrilineal exceptions, Mill didn’t know about them, so it appeared universal. And Mill’s chief argument is to say, you’re making a big mistake if you overly aggregate information from this one observation, that behind it is a lot of structure, and a lot of the structure is contingent, and that if I, Mill, unpack the contingency for you, you will see behind the signals. So Mill is much more rationalist than Hayek. It’s one reason why Hayek hated Mill. But clearly, on the issue of women, Mill was completely correct that women can do much better, will do much better. It’s not clear what the end of this process will be. It will just continue for a long time. Women achieving in excellent ways. And it’s Mill’s greatest work. I think it’s one of the greatest pieces of social science, and it is anti-Hayekian. It’s anti-small c conservatism.

Tyler frames the dispute in a Hayekian way. Unpacking his argument (I think this is right, but am happy to listen to corrections), the Hayekian perspective is that we want information that will allow people to coordinate productively. Hayek suggests that this information is most likely to guide outcomes in “spontaneous orders” like the market, where people can figure out, without very much external constraint, what the rules of interaction ought to be. Better rules will emerge through an unguided evolutionary process within a broader constitutional order, whose main function is to guard against forces that might disrupt this spontaneity.

Tyler points out out that this Hayekian framework is missing something big with respect to gender relations. Spontaneous orders have historically involved a lot of discrimination against women, who are physically weaker than men, and less able to defend their interests. J.S. Mill argued, on the basis of a non-Hayekian rationalist logic, that women would be able to achieve far more if various contingent rules discriminating against them unraveled, so that women’s rights to engage fully and equally were protected. And, Tyler concludes, Hayek has turned out to be very wrong, while Mill has turned out to be absolutely right, on this particular point.

But you can also think about this in a non-Hayekian framework, that of simple game theory. More pertinently – and this is the argument of a great short piece by Jack Knight (slightly imperfect scan here – I’ll try to get a better one when I next get close to a proper scanner), you can think of it within a mixed motive coordination framework. The Battle of the Sexes game can, despite its crude and stereotypical framing, be used to shed light on the battle of the sexes.

Jack’s piece is less well known than it should be, because it appears as a chapter in an edited volume. It summarizes and clarifies the argument that he makes in his much better known book, Institutions and Social Conflict in some very nice ways. What it suggests is that Tyler’s criticism of Hayek can be generalized. Spontaneous order arguments (which rely on evolution), and arguments more generally that private actions lead to superior outcomes, are special cases of a more general framework. They are likely to work best when people are indifferent between the possible outcomes, or where power disparities between people are negligible.

To understand this, let’s start with the mixed motive coordination game itself. The miracle of Google Image Search reveals a version of the Battle of the Sexes game on an economics education website, in all its unreconstructed and awful glory, in which “MAN” dukes it out with “WOMAN” over whether or not they should should both go to the “Boxing” game, or just go “Shopping” instead.

Battle of the sexes

Happily, you can substitute out the crude gender assumptions without changing the math. Let’s assume instead that two individuals, with non gender specific names, Pat and Lindsay, are in a relationship. They disagree over how they should spend a night out, even if they both love each other and agree that they want to spend it together. For boxing and shopping we can substitute in – I don’t know – Dungeons and Dragons versus going to an arthouse movie – or whatever other pair of alternative activities you like.

The payoffs in this game reflect the facts that (a) both actors are better off coordinating, and (b) that they have different preferences over how they coordinate (that is why it is mixed motive coordination). Both Pat and Lindsay have higher payoffs when they coordinate on the same strategies than when they don’t. Indeed, if they fail to coordinate, each of them gets the “breakdown values” with zero payoffs. However, they disagree over what they should coordinate on. Perhaps Pat prefers Dungeons and Dragons (they get a payoff of 2, and Lindsay gets a payoff of 1), while Lindsay prefers the arthouse movie. In short, they have shared incentives to coordinate, but clashing incentives over which strategies they should coordinate on

What Jack does, in the chapter that I’ve linked to, is to suggest that this simple game tells us a lot about where informal institutions come from, and how they work. There are a lot of informal institutions in human societies – informal rules that aren’t laid down by the government, but that are pretty pervasive. Think about how people queue in different countries. Think also – to make the stakes clearer – about the informal but harshly enforced expectations that Black people would make way for White people if they encountered each other on the sidewalk in the pre-Civil Rights South.

Jack suggests that these informal rules and social institutions are the culmination of a myriad of mixed motivation interactions. To illustrate this, we can apply the battle of the sexes framework to the actual battle of the sexes that Tyler highlights. We can stick with the players who are identified as MAN (here, some representative man in a given society) and WOMAN (here, some representative woman), but with quite different valences. Instead of reproducing cliches (those women, they love their shopping!), we can use this framework to ask about the deep processes that the cliches arise from. Where does the norm that women ought  focus on household duties arise from? Why, more generally, do many norms emerge that restrict the activities of women, while providing an expansive role for men?

As Jack notes in his book, across a wide variety of societies, “informal rules have structured relationships between men and women in such ways as to produce long-term distributional differences.” In non-academic language, informal norms have emerged across many societies that disadvantage women in multiple ways (e.g. denying them full property ownership, or ability to participate in public life). And Jack’s argument is that these rules have emerged from many, many interactions between men and women, in which men systematically had the upper hand. The battle of the sexes is played again, and again, and again, between different men and different women. And as it is played repeatedly, shared expectations emerge, which then become informal rules, that everyone ‘knows,’ even if they do not necessarily like them.

The key to this argument is the breakdown values – the payoffs that actors get if they don’t coordinate in a mixed motive interaction. In the simple game above, these payoffs are symmetrical: everyone gets zero payoff if they fail to coordinate. But what if the payoffs are asymmetrical? In other words, what if one actor ends up only mildly worse off if there isn’t coordination, while the other ends off much worse off? In the actual battle of the sexes in most societies, women plausibly faced much worse outcomes than men, when they disagreed over something important. In the best case, women probably had much fewer or much worse outside options. In the worst case, they faced the threat of violence or death if they persisted in doing things that men would prefer they didn’t do.

The argument, then, is that these differences in breakdown options make it much harder for women to bargain hard for what they want, and correspondingly much easier for men. Both sides know that the woman will be much worse off than the man if they fail to reach agreement. And that in turn means that they are much more likely to coordinate on the strategies that favor the man.

As men and women engage in this kind of interaction, again, and again and again, they set general expectations which in turn lead to informal rules. Women figure out, as a class, that they are likely to end up worse off if they disagree with men, and men are able to make them back down. Norms emerge in a decentralized way that systematically favor the more powerful actor, and disfavor the less powerful one.

As a result, the rules that emerge from spontaneous orders are likely to reflect the power asymmetries within them. Such asymmetric rules are adhered to not because they are legitimate in any meaningful way, or necessarily deeply internalized, but because the disfavored individuals expect that they will be worse off if they don’t abide by them.

And this can be generalized. The kinds of evolutionary arguments that Hayek makes (e.g. that in a spontaneous order, rules will evolve that are to our broad advantage), and the transaction cost arguments made by institutional economists such as Williamson and North turn out to be special cases of the mixed-motivation framework. This can be seen if you look at a more generalized version of the 2×2 framework, where two players, Player 1 and Player 2 each have two strategies, X and Y.

If a1 is higher than b1, and a2 is higher than b2, then this is some kind of coordination game. Both players are better off converging on an outcome where they match strategies, playing X, X, or Y, Y, and getting the higher payoffs. If they play X,Y or Y, X they both end up with worse payoffs.

Jack argues that evolutionary accounts like Hayek’s will work best when a1 is equal to a2. That is, they are really arguments about pure coordination rather than mixed motive coordination. If neither Player 1 nor Player 2 really cares about which outcome they coordinate on – all that matters is that they agree – then the evolution of norms will be a relatively uncomplicated process. Whether it ends up at X,X or Y,Y will be arbitrary and possibly stochastic, since no-one is going to have any particular incentive to struggle or to disagree. The classic example of a pure coordination game is that of deciding which side of the road people should drive on – no-one cares much whether the rule says that it is on the left side or the right side, so long as there is a rule, and everyone knows it.

He argues that transaction costs accounts, like Williamson’s or North’s (some of the time: Doug was a colleague and occasional collaborator of Jack’s and sometimes shifted position) are often most plausible when b1=b2. These accounts predict that economic institutions will tend to be efficient – they will minimize transaction costs. Jack suggests that such institutions will only emerge in the absence of power asymmetries – that is, when the breakdown values of both actors are much the same. Under those circumstances, it will be impossible for one actor to use credible threats to force another to accept an outcome that it doesn’t prefer. Without power asymmetries, inefficient institutions, which benefit the more powerful actor at the cost of lower overall gains, are unlikely to emerge or persist.

For just the same reason, when there are significant power asymmetries, we are likely to see  the opposite outcome – persistent inefficient institutions that benefit the powerful at the expense of overall wellbeing and efficiency. Indeed, Jack’s framework suggests that both evolutionary accounts and transaction cost accounts of institutional emergence and change are no more than special cases of a broader approach that does not assume either as a general matter that actors are indifferent between outcomes, or that actors have relatively equal bargaining power. Much, and likely most of the time, actors will have different interests (they will prefer to coordinate on different outcomes), or different levels of bargaining power (some will be much worse in the case of breakdown than others), or both.

In other words, power matters a whole lot. I suspect Tyler won’t agree with this claim – but Jack’s framework suggests that Hayek’s blind spot about women isn’t a special casem and instead a more general blind spot.  Spontaneous orders and decentralized bargaining are only likely to lead to attractive informal rules under highly specific circumstances. And creating those specific circumstances will likely require a lot more social engineering than Hayek would be comfortable with. The JS Mill claim about women can be made pari passu about a whole variety of other groups who find themselves informally discriminated against across a wide variety of circumstances (and women still have to deal with powerful structural forces of discrimination, even if their prospects are now much better).

Two final points. One is that this argument (made in various forms in the late 1980s and early 1990s) speaks to a much more recent emerging literature that asks about the relationship between power and emergent informal norms. This paper by Suresh Naidu, Sung-Ha Hwang and Sam Bowles is one example. Liam Kofi Bright, Nathan Gabriel and Cailin O’Connor’s recent piece on the stability of racial capitalism is another. And one day, for that matter Cosma and I might harpoon our own Great White Whale paper and bring the proceeds into port (we do have a different piece on a very different topic coming out soon).

The other is that there are other aspects of Hayek’s arguments about spontaneous orders that only partly fit with this account. He suggests that they don’t just lead to better rules but better discovery. There is more to be said about this (and in particular the aristocratic elements), but that would require a post of its own.

The New U.S. Labor Movement

Published by Anonymous (not verified) on Tue, 06/02/2024 - 8:20am in

The labor movement in the United States is passing through a transition from the stagnation of the period from 1980-2010 to a new period of dynamic change in industrial decentralization, new technologies, work, organization, union activism, and the enormous and enveloping issue of climate chan

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Gaza: A Ghastly Window into the Crisis of Global Capitalism

Published by Anonymous (not verified) on Sun, 28/01/2024 - 5:11am in

Gaza is a real-time alarm bell that genocide may become a political tool in the decades to come for resolving capital’s intractable contradiction between surplus capital and surplus humanity.

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Can Xi Jinping’s “Chinese Model” Supplant Capitalist Democracies and Why Should Western Socialists Care? – Part 4

Published by Anonymous (not verified) on Wed, 10/01/2024 - 7:36am in

Given China’s drivers, it’s difficult to imagine how this trend could be halted or reversed short of the collapse or overthrow of the CCP. That’s coming but of course it’s impossible to predict when.

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Can Xi Jinping’s “Chinese Model” Supplant Capitalist Democracies and Why Should Western Socialists Care? – Part 3

Published by Anonymous (not verified) on Wed, 20/12/2023 - 3:09am in

If Xi’s Chinese-style modernization has shattered the myth that modern-is-Western, then why is his economy still so dependent on Western science and technology?

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The post Can Xi Jinping’s “Chinese Model” Supplant Capitalist Democracies and Why Should Western Socialists Care? – Part 3 appeared first on New Politics.

Abby Innes introduces Late Soviet Britain: Why Materialist Utopias Fail

In an excerpt from the introduction to her new book, Late Soviet Britain: Why Materialist Utopias Fail, Associate Professor of Political Economy at LSE’s European Institute Abby Innes considers how factors including the rise of neoliberalism have destabilised Britain’s governing institutions.

Late Soviet Britain: Why Materialist Utopias Fail. Abby Innes. Cambridge University Press. 2023.

Find this book: amazon-logo

Late Soviet Britain book cover in red cream grey and black colours.Why has Great Britain, historically one of the strongest democracies in the world, become so unstable? What changed? This book demonstrates that a major part of the answer lies in the transformation of its state. It shows how Britain championed radical economic liberalisation only to weaken and ultimately break its own governing institutions. This history has direct parallels not just in the United States but across all the advanced capitalist economies that adopted neoliberal reforms. The shattering of the British state over the last forty years was driven by the idea that markets are always more efficient than the state: the private sector morally and functionally superior to the public sector. But as this book shows, this claim was ill-founded, based as it was on the most abstract materialist utopia of the twentieth century. The neoliberal revolution in Great Britain and Northern Ireland – the United Kingdom – has failed accordingly, and we are living with the systemic consequences of that failure.

Britain championed radical economic liberalisation only to weaken and ultimately break its own governing institutions.

The rise of nationalist populism in some of the world’s richest countries has brought forward many urgent analyses of contemporary capitalism. What this book offers, by contrast, is the explanation of a dark historical joke. It explores for the first time how the Leninist and neoliberal revolutions fail for many of the same reasons. Leninism and neoliberalism may have been utterly opposed in their political values, but when we grasp the kinship between their forms of economic argument and their practical strategies for government, we may better understand the causes of state failure in both systems, as well as their calamitous results.

Comparing the neoclassical and Soviet economic utopias, [w]hat emerges are mirror images – two visions of a perfectly efficient economy and an essentially stateless future.

Britain’s neoliberal policies have their roots in neoclassical economics, and Part I begins by comparing the neoclassical and Soviet economic utopias. What emerges are mirror images – two visions of a perfectly efficient economy and an essentially stateless future. These affinities are rooted in their common dependence on a machine model of the political economy and hence, by necessity, the shared adoption of a hyper-rational conception of human motivation: a perfect utilitarian rationality versus a perfect social rationality. As the later policy chapters demonstrate, these theoretical similarities produce real institutional effects: a clear institutional isomorphism between neoliberal systems of government and Soviet central planning.

When it comes to the mechanics of government, both systems justify a near identical methodology of quantification, forecasting, target setting and output-planning, albeit administrative and service output-planning in the neoliberal case and economy-wide outputs in the Soviet. Since the world in practice is dynamic and synergistic, however, it follows that the state’s increasing reliance on methods that presume rational calculation within an unvarying underlying universal order can only lead to a continuous misfit between governmental theory and reality. These techniques will tend to fail around any task characterised by uncertainty, intricacy, interdependence and evolution, which are precisely the qualities of most of the tasks uploaded to the modern democratic state.

In neoliberalism, the state has been more gradually stripped of its capacity for economic government

The Soviet and neoliberal conceptions of the political economy as a mechanism ruled by predetermined laws of economic behaviour were used to promote pure systems of economic coordination, be that by the state or the market. Leninism, as it evolved into Stalinist command planning, dictated the near-complete subordination of markets to the central plan. In neoliberalism, the state has been more gradually stripped of its capacity for economic government and, over time, for prudential, strategic action, as its offices, authority and revenues are subordinated to market-like mechanisms. Both Soviet and neoliberal political elites proved wildly over-optimistic about the integrity of their doctrines, even as they demonised the alternatives.

For all their political antipathy, what binds Leninists and neoliberals together is their shared fantasy of an infallible ‘governing science’ – of scientific management writ large. The result is that Britain has reproduced Soviet governmental failures, only now in capitalist form. When we understand the isomorphism between Soviet and neoliberal statecraft, we can see more clearly why their states share pathologies that span from administrative rigidity to rising costs, from rent-seeking enterprises to corporate state capture, from their flawed analytical monocultures to the demoralisation of the state’s personnel and, ultimately, a crisis in the legitimacy of the governing system itself. This time around, however, the crisis is of liberal democracy.

The book’s policy chapters in Part II explore how the neoliberal revolution has transformed the British state’s core functions in the political economy: in administration, welfare, tax and regulation and the management of future public risk.

After setting out the philosophical foundations of these ideologies, the book’s policy chapters in Part II explore how the neoliberal revolution has transformed the British state’s core functions in the political economy: in administration, welfare, tax and regulation and the management of future public risk. In Part III I examine the political consequences of these changes, and demonstrate how Britain’s exit from the European Union has played out as an institutionally fatal confrontation between economic libertarianism and reality. The final chapter considers how the neoliberal revolution, like its Leninist counterpart, has failed within the terms by which it was justified and instead induced a profound crisis not only of political and economic development but also of political culture.

Under ‘late’ neoliberalism we can see a similar moment of political hiatus, as neoliberal governments likewise resort to nationalism and the politics of cultural reaction to forestall public disillusionment and a shift in paradigm.

I use different periods of Soviet history as an analytical benchmark throughout the book, but the Brezhnev years (1964–1982) were those of the fullest systemic entropy: the period of ossification, self-dealing and directionless political churn. Under ‘late’ neoliberalism we can see a similar moment of political hiatus, as neoliberal governments likewise resort to nationalism and the politics of cultural reaction to forestall public disillusionment and a shift in paradigm. I use the United Kingdom as the case study because it was both a pioneer of these reforms and, in many respects, has gone furthest with them. If neoliberalism as a doctrine had been analytically well-founded, it was in the United Kingdom, with its comparatively long and strong liberal traditions, that we should have seen its most positive outcomes.

By the early 2020s the Conservative government of Boris Johnson had sought to criminalise peaceful protest, to constrain media independence and to insulate the political executive from parliamentary and public scrutiny.

To be clear, Britain’s neoliberals were never totalitarians of the Soviet variety. They never used revolutionary violence to create a one-party state, deployed ubiquitous intelligence agencies to enforce repression or used systems of mass incarceration and murder for political ends. Britain’s neoliberal consensus has nevertheless favoured a one-doctrine state, and the violent suppression of specific, typically economy-related, protests has been a periodic feature of its politics since 1979. Britain’s neoliberal governments have also developed an increasingly callous attitude to social hardship and suffering. Most troubling of all is that the more neoliberalism has been implemented, the more the country has been driven to the end of its democratic road. By the early 2020s the Conservative government of Boris Johnson had sought to criminalise peaceful protest, to constrain media independence and to insulate the political executive from parliamentary and public scrutiny. In short, it had abused its authority to disable legitimate political opposition. What I hope to explain is why any regime that commits itself to neoliberal economics must travel in this direction or abandon this ideology.

What follows is an argument about the collapse of the empiricist political centre and its replacement by utopian radicalism. Specifically, this is a story of how the pioneering and socially progressive philosophy of liberalism is being discredited by utopian economics and the practically clientelist methods of government that follow from it, just as the politics of social solidarity essential to a civilised world was undermined by the violence and corruption of the Soviet experiment. As the old Soviet joke had it, ‘Capitalism is the exploitation of man by man. Communism is its exact opposite.’ There are, of course, many challenges distinct to neoliberalism and I pay attention to them, but my purpose here is to see what we can learn about the political economy of the neoliberal state when we look at it through the lens of comparative materialist utopias.

Note: This excerpt from the introduction to Late Soviet Britain: Why Materialist Utopias Fail by Abby Innes is copyrighted to Cambridge University Press and the author, and is reproduced here with their permission.

This post gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics and Political Science. The LSE RB blog may receive a small commission if you choose to make a purchase through the above Amazon affiliate link. This is entirely independent of the coverage of the book on LSE Review of Books.

Image Credit: globetrotters on Shutterstock.

Can Xi Jinping’s “Chinese Model” Supplant Capitalist Democracies and Why Should Western Socialists Care? – Part 1

Published by Anonymous (not verified) on Wed, 22/11/2023 - 8:23am in

Xi’s “new type civilization” is the opposite of all this. Instead of enlightenment, emancipation, freedom, critical thinking, science and democracy.

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The post Can Xi Jinping’s “Chinese Model” Supplant Capitalist Democracies and Why Should Western Socialists Care? – Part 1 appeared first on New Politics.

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