Letter to Barack #15: Better Science, Better Policy

Dear President Obama,

The questionable epistemological status of mainstream economics is displayed daily in the press and on television as scholars trained in that discipline purport to derive explanations of the current crisis (and associated predictions and prescriptions) from a single prior case or period. For some everything went wrong with the deregulation of recent decades. For others today´s case is comparable to the recession of 1981 and 1982, or to the Great Depression of the 1930s, or to the crisis of 1873. The chairperson of your Council of Economic Advisors distinguished herself by studying monetary and fiscal policy in the 1930s, and she is on record as encouraging graduate students who wish to advance in the profession to do detailed empirical studies of particular historical cases similar to those she does herself.

If one accepts the two premises that (1) Observed phenomena do not reveal the causal powers that produce them, and (2) What is happening now, as we move from a chaotic present to an uncertain future, is not a repetition of any single pattern of past events; then we must conclude that comparisons with the Great Depression or any other period or case are not likely yield reliable guidance as we endeavor to select among the options available to us those present actions which will produce a better future.

To begin to dissolve economics into a broader socioeconomics that will be capable of explaining the phenomena we are experiencing, and of contributing to a more reliable guidance of social reconstruction, it helps to consider circumstances in which it is logically valid to draw general conclusions from a single case. When biologists study a single specimen, they have good reasons for believing that their findings will be true of all individuals of the same species. A beginning student who dissects a frog finds structures common to all frogs of the species dissected. A frog, unlike a Great Depression, is made of bones, tissues, and organs that repeat themselves over and over again in numerous similar cases.

Why? Because living beings are built according to instructions encoded in DNA. In a normal environment, a given seed will grow into a given plant or animal.

The ecohistorican Thomas Berry frequently remarks that the human species is biologically coded to be culturally coded. The same word used in speaking of DNA, the word ¨code,¨ can be employed to refer to cultural codes that organize behavior (norms, rules, customs, habitus). Up to a point the anthropologist can echo the biologist in generalizing from a single specimen, learning about a culture by interviewing and observing a single informant who has internalized its codes.

When applied to economics (or, rather, to dissolving economics into transdisciplinary social science) an approach that starts by detecting and articulating cultural structures built from codes (¨¨symbolic structures¨¨ in the terminology of Jürgen Habermas) calls for giving greater attention to what Joseph Schumpeter called ¨institutional framework¨, and for contextualizing what he called ¨¨analysis.¨ When Smith and Ricardo assumed that society divided into three classes of human beings: (1) the landowners, (2) the merchants and manufacturers, and (3) the laborers; they assumed what Schumpeter calls an institutional framework. When they took it to be the task of the science of political economy to explain the natural and proper division among the social classes of society´s annual produce (or, what for them was the same thing, its annual revenue), they were doing what Schumpeter calls analysis. They were proposing a theory of rent, a theory of profits, and a theory of wages.

In Schumpeter´s muddled mind it was possible to write a history of politically neutral economic analysis, devoted to explanation while rigorously avoiding prescription, while assigning to a separate discipline, sociology, the study of the constitutive rules of the institutions that created the phenomena observed. But we will not make much progress in improving the performance of our institutions until we reform our social sciences to bring the basic rules of institutional frameworks into focus; for they are the principal causes of the phenomena observed.

Dissolving economics into a transdisciplinary social science that studies the causal powers of cultural coding contributes to solving what Michel Foucault called the principal political problem of our times. Foucault remarked that the principal political problem of our times was lack of imagination. His remark describes the debates in the United States Senate and House of Representatives on the stimulus package, which were almost entirely about one or another proposal to get the economy moving again by restoring the confidence of the investors who invest, restoring the confidence of the consumers who buy, restoring the confidence of the bankers who lend, and restoring the confidence of the executives who manage firms.

Retiring economics from its splendid and disastrous isolation, connecting it with sociology and with history and all the arts and sciences, helps to free us in many ways. One of those ways is that it frees our imagination and therefore our vision. We see that basic cultural structures might change; we see that they have changed (“Always historicize!” wrote Fredric Jameson): we open our eyes and see that human behavior is in practice not nearly as dominated by profit-seeking as it has been in mainstream economic theory from Smith to Friedman.

We see the present crisis as an opportunity. It is an opportunity to wean ourselves from our excessive dependence on the for-profit subsector of the private sector. We see that the public sector and the non-profit sector can take up the slack when for-profit private business sags. Instead of chasing the will-of-the-wisp ¨confidence¨, which always depends (as Keynes taught us) not on any rational or objective standard whatever, but on people´s subjective perceptions of other people´s subjective perceptions, we can come down to earth and focus on the physical task before us: building sustainable cultures that mobilize resources to meet needs.

We can be thankful that just as global warming is getting out of control, while human population growth is continuing to spiral out of control, and –to generalize a series of ecological warning signs without naming each specifically—just as we are on the verge of destroying our habitat and therefore destroying our species; a financial crisis has come to save us. The financial crisis is slowing down the profit-driven machine that is destroying us. A better epistemology helps us to see the financial crisis as an opportunity to let the private for-profit economy slow down, as an opportunity to bring that machine under ethical and rational control, and as an opportunity to supplement it with other ways (public and non-profit) to mobilize resources to meet needs. The present crisis is our opportunity to become a sustainable species in a sustainable biosphere.

Peace and all good,

Howard R.

From One of Your Voters: Letter to Barack #1

This is me speaking.

I am one of the 52 million people who voted for you, one of the 3 million in your database who contributed small amounts of money to your campaign.

Remember me?

I am writing to make sure I understand our deal. I watched your acceptance speech at Grant Park in Chicago. I watched many of your speeches.

You said together we are going to transform America and the world. Right? We are going to transform not from the top down but from the bottom up. Did I get that right? It is not you who are going to transform America but we. Is that the deal? You are calling for a spirit of service and sacrifice. That’s what I heard.

In a speech to financiers on Wall Street you said the economy has a higher purpose. The higher purpose is that we are all in this together. From time to time we change the rules of the economic game to make the economic machine serve its purpose better. (I read the speech on your website www.barackobama. com) Your Wall Street friends voted for you even though you told them you would raise their taxes. That sent a message.

So –here is my conclusion, my message: I am not supposed to be just watching TV waiting to see whom you will name to cabinet posts. I am supposed to be out on the street transforming my town and neighborhood. Right?

This afternoon I will donate twelve bottles of cooking oil to our neighborhood food pantry. I will talk up cooperation. I will also work on changing our irrigation system from spray to drip (Drip benefits the environment by producing more food with less water.)

I am copying this to lists of transformers. If I am missing something, or if I have misunderstood something, hopefully somebody will set me straight.

Howard R.

Nov. 6, 2008

Obama and the New Paradigm: Letter to Barack #5

Dear President-elect Obama,

            In your speech today you said that in times of crisis like these, ““We have acted boldly, bravely, and above all, together."   You went on, "That is the chance our new beginning now offers us, and that is the challenge we must rise to in the days to come.”

            The phrase “above all together” expresses the reason why I voted for you.

            Your frequent use of ubuntu rhetoric keeps alive my hope that you are open to the required new paradigm.

            New paradigm.   What makes it new is that (in contrast to economics) it works with human nature as it has been discovered by biology and by anthropology.   Economics is the old paradigm.   In the new paradigm economics is not forgotten; it is included as Newton ’s physics is included in Einstein’s.

            What makes it a paradigm is that it governs the nominal level of measurement, defining the objects to which mathematical calculations are applied.

            Required.  What makes it required is that turning back the calendar to the progressive policies of FDR, Harry Truman, and Jimmy Carter; or ditching today’s neoliberal economics and returning to the centrist economics associated with such names as Paul Samuelson, Joseph Stiglitz, and John Maynard Keynes; will not work. 

            There was a reason why free market fundamentalism triumphed in 1980 and stayed in vogue until November 4, 2008.   In the late 1970s Jimmy Carter’s policies were not working, nor were similar policies in other places.  Centrist economics was not working.

            Instead of solving the unsolved problems that tanked progressive politics in 1980, the world returned to old-fashioned free market fundamentalism.   Everybody with any sense knew   that inevitably free market fundamentalism would fail.   It failed in 1873.  It failed in 1929.   It would fail again.

            Today’s question is not, how to get past the crisis and bring capitalism back to normal? Today’s real question is, how to make feasible the good intentions of the Jimmy Carters of the world?  In other words, the question is how to overcome the structural obstacles that made West European social democracy and its analogues elsewhere stop in its tracks, reverse engines, and decline?

            We do not answer today’s real question by demonstrating the errors of free market fundamentalism.   We do not answer it by advocating the standard progressive politics and centrist economics of the past.  We do answer it in practice by transforming the structures that create the obstacles that brought social democracy to grief. 

            In other words, we answer it by transforming civil society.

            (Readers who find the preceding paragraphs mysterious may wish to look up on the Internet ubuntu, nominal level of measurement, Thomas Kuhn, Dilemmas of Social Democracies. Amartya Sen’s “socioeconomics”)

            I spent today trying to cooperate with what I take to be your best thinking.  I made an exception to my vegetarian principles by donating chickens to a chicken-dinner fundraiser for a local corps of hospital volunteers known as “the ladies in white.”   I believe that  today’s immediate priorities include keeping the hospitals running; they also include making sure everyone has at least one square meal a day, a place to live, and something to do.

           Yours truly,

            Howard R.

The Needed Paradigm Shift: Letter to Barack #10

Dear President-elect Obama,

 

           The shift from an economics paradigm to an anthropology (or anthropology/ecology, or transdisciplinary) paradigm is not complicated or hard to understand.  It is a matter of enlarging the field of human practices studied. 
When designing policies it is a matter of considering more possibilities, more options.  And more actors.

 

          At the present time efforts to revive the American economy concentrate on creating conditions under which producers can sell their products at cost-covering prices.   For the most part the efforts are even narrower than that:   They concentrate on stimulating demand and cheapening credit in order to make it profitable for employers to hire employees.   The fact that human beings lived on this planet for two hundred thousand years without capitalism is ignored.   As is the fact that millions still do.

 

          The needed shift consists of taking a broader viewpoint; it consists of doing socioeconomics as Jose Luis Coraggio,  Amartya Sen, and others recommend; and even in going beyond their recommendations to study basic cultural structures and to develop methodologies for social transformation grounded in such studies.   (As I have explained elsewhere, my recommended broader viewpoint is a “paradigm shift” with respect to some of the ways Kuhn employs the concept of “paradigm” although not with respect to all of them.)

 

          Thomas Kuhn’s studies in the history of science tend to show that paradigms are not abandoned because facts demonstrate their inadequacies.  There are ways to adjust theory to data to save the paradigm even when an accumulation of anomalies strongly suggests that the paradigm is out of touch with reality.   For example:  when the economy of Indonesia unexpectedly collapsed in 1998, mainstream economists did not question economics.  Experts at Harvard, at Oxford, and at the World Bank had been praising Indonesia as an example of correct macroeconomic policy.  When reality flatly contradicted what they had been saying, instead of admitting that their science is one that is incapable of accurately predicting future phenomena, and incapable of providing policy advice that works, they attributed the anomaly to “crony capitalism.”   Instead of questioning the basic ethics and dynamics of capitalism they employed the adjective “crony” to explain after-the-fact why the collapse observed in Indonesia differed from the stable growth that before-the-fact they had anticipated.   As you will remember from your debates with him, John McCain somewhat similarly used “greed” as an explanation of the debacle that was unfolding as he spoke.    Thus an imaginary ideal survives by attributing its real world failures to flukes.    These examples came too late to be included in Kuhn’s books, but he could have cited them if they had happened earlier and if he had undertaken to include the history of economic thought within the scope of his studies. 

 

          Although Kuhn’s findings tend toward the conclusion that a paradigm is never refuted by a crucial experiment, it appears that we have a paradigm-testing crucial experiment, or something very like one, underway at the present time.

 

          You have selected a highly competent economics team, backed up by colleagues in the profession who will feed your team even more expertise than they themselves already have.   Nobody knows the details of past recessions and the details of past Federal Reserve and government policies as well as your advisors.   I think it is fair to say that if they cannot give you good advice, then mainstream economics cannot give you good advice.

 

          You are approaching the inauguration with nearly a 75% approval rating.   You have Democratic majorities in the House and Senate.   You have solid friends on Wall Street and in organized labor.   If ever there were a United States President positioned to get good expert advice and to implement it, you are he.

 

          If December 2009 finds the United States economy worse instead of better, then we should be able to rule out professional incompetence and political impotence as causes of the phenomena observed.   After a year (or perhaps less than a year, or perhaps more than a year) of floundering and sinking in spite of well-advised and capable leadership, the country may be ready to consider the dominant paradigm tested and refuted.    More people may come to agree with Anthony Quinn (author of Ishmael) that what we need are not new policies but new paradigms.

 

          If, on the other hand, December of 2009 finds the American economy humming along nicely, producing appropriate goods and services and distributing them equitably, then we should be able to conclude that the paradigm we already have is in synch with reality.   We should be prepared to acknowledge the validity of the worldviews of the Paul Samuelsons and the Paul Krugmans and the Joseph Stiglitzes who find the centrist economics of the bulk of the profession to be sound, and attribute the downfall of the economy to the bizarre ideologies of the likes of George W. Bush and his radical conservative clique.    Normal science will be vindicated.    Professional economists will have been shown to be not only well read in their chosen field of study, but also (because their research paradigms tap the causal powers that produce the phenomena observed) experts on how the world works.

 

          Meanwhile, even before the rest of the country is ready to see beyond the dominant paradigm, those of us who are already convinced that trying to make for-profit business profitable again is too narrow a focus will continue to support the people’s economy, public sector employment, non-profits, community service, and usable parts of the many other alternative forms of livelihood practiced throughout history and around the globe.  We will support the Rotarians and the American Friends Service Committee, the Salvation Army and Catholic Charities, and whomever organizes emergency relief; expecting that as it gradually dawns on people that the emergency is permanent, the relief will become permanent.   “Relief” here is a word that refers not just to keeping the food pantries restocked.   It refers to social integration--to dignity, discipline, meaning, and useful employment.    At an academic level, we will continue to dissolve economics into transdisciplinary social and natural science.

 

Peace and all good,

 

Howard R.