Durkheim QotD: Economic Crises vs. Murder

In The Division of Labor in Society, Durkheim analyzes different types of crimes and how they reveal different forms of social organization. Durkheim argues that crime is identifiable by its punishment – understanding punishment gets at the essence of crime. Moreover, an act is criminal because it offends our collective consciousness, not the other way around. Durkheim argues that crimes don’t always correspond to any sort of harm to society, and even when two acts do both harm society, the punishments given to the different acts do not correspond to the amount of harm they cause society. One example he uses near the beginning of chapter two feels particularly relevant in the present moment:

In the penal law of most civilised peoples murder is universally regarded as the greatest of crimes. Yet an economic crisis, a crash on the stock market, even a bankruptcy, can disorganize the body social much more seriously than the isolated case of homicide. Assuredly murder is always an evil, but nothing proves that it is the greatest evil. What does one human being the less matter to society? Or one cell fewer in the organism? It is said that public safety would be endangered in the future if the act remained unpunished. But if we compare the degree of danger, however real it may be, to the penalty, there is a striking disproportion. (33)

On the failure to prosecute the movers and shakers behind the 2008 crisis, this 2011 NYT article may be relevant, as well as much of Matt Taibbi’s work.

Hirschman QotD on Macroeconomic Policy and Surprise

Albert Hirschman is one of the most interesting economists of the 20th century, and not just because of his excellent last name. He was influential in development economics (unbalanced growth, linkages), organizational theory (“Exit, Voice and Loyalty”), and the the history of economic thought (“The Passions and the Interests”). A bit closer to my interests, Hirschman contributed an interesting essay to one of the rarest of academic species: the important edited volume, in this case, The Political Power of Economic Ideas: Keynesianism across Nations. Hirschman’s chapter argues that Keynesian economics may have been less influential in the post-WWII US than expected (given its policy dominance 1938-1945, in the “second New Deal” and WWII itself) because Keynesian economists redirected their attention to the world stage, leading influential missions to Japan, Germany, and eventually almost everywhere. Thus, Keynesianism came to dominate the world, even as it never fully took root in the US and faced lots of challenges.

One of Hirschman’s best arguments concerns the connections between macroeconomic policy making and “surprise”. Hirschman notes the arguments of other scholars in the edited volume that public understanding of a policy is possibly one predictor of its policy success – to implement new policies, you have to convince the public of how and why they work, and overturn existing understandings of the old policy. But, Hirschman argues that this can create a tension, especially when macroeconomic policies emphasize expectations as a source of problems in the economy:

To work at all, a policy must first be at least minimally understood, but it becomes unsustainable if it is understood too well, in the sense that the operators will neutralize it by anticipating its effects. In other words, the public’s understanding of the policy must be neither inadequate nor excessive, but since the understanding presumably passes from the former of these negative conditions to the latter, the viability of any policy is necessarily limited in time. Recent experience suggests that this is not an entirely unrealistic interpretation of macroeconomic policy making in a decentralized economy. (Hirschman 1989: 355)

I think part of the “rational expectations” move in recent economic theorizing is directly trying to address this problem: to come up with a macroeconomic policy that “works” even when fully understood and predicted by the relevant actors whose behavior you are trying to predict and control. But, these policies may still make strong assumptions about the knowledge of economic actors (in this case, assuming a maximal understanding which may not obtain). So it’s still a fascinating problem, and I recommend Hirschman’s take on it for anyone interested.

Keynes on Financial Markets QotD

Keynes is a fascinating writer. Some of his essays are absolutely witty. The General Theory (GT), on the other hand, is a legendarily inscrutable book, subject to almost as much exegetical debate as the work of Marx. But even in GT, Keynes has some brilliant moments. In a discussion of the stock market,* Keynes lambasts investors for caring about liquidity more than about making good investments:

The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future. The actual, private object of the most skilled investment to-day is ‘to beat the gun’, as the Americans so well express it, to outwit the crowd, and to pass the bad, or depreciating, half-crown to the other fellow. (GT, 155)

All of this has happened before, and all of it will happen again…

* A discussion which follows, oddly, a statement of what would later be called the weak efficient markets hypothesis (I think):

We are assuming, in effect, that the existing market valuation, however arrived at, is uniquely correct in relation to our existing knowledge of the facts that will influence the yield of the investment, and that it will only change in proportion to changes in this knowledge… if we can rely on the maintenance of the convention, an investor can legitimately encourage himself with the idea that the only risk he runes is that of a genuine change in the news over the near future…(GT, 152-153)

I’m not yet certain, but it would be fascinating if Keynes’ General Theory was somehow premised on the efficient markets hypothesis that has come to be associated (albeit more in its strong than weak form) with very conservative/anti-government/pro-market economists. Keynes later goes on to talk about speculation at length, and speculative investment overwhelming long-term investment, so I think he was more explaining the potentially reasonable, but practically problematic, convention of looking to market values to assess the value of investments rather than justifying its truth in practice.

Keynes QOTD: Econometrics as Alchemy

Keynes is rightly regarded as one of the most influential economists of 20th century. But I think he also has a reputation for being a bad writer. The General Theory, his most widely cited book, is a dense tome filled with somewhat imprecise new concepts that later authors have spent 75 years debating (spawning schools including the [Neo-Classical] Keynesians, New Keynesians, Post Keynesians, Paleo Keynesian…). Keynes’ reputation, though, is unfair: most of his writings are clear and incredibly witty, befitting the man himself, who was a member of the influential literary/artistic Bloomsbury Group along with Virginia Woolf and more. So, I tend to imagine him as a character in an Oscar Wilde play. Keynes’ (1939) review of Jan Tinbergen’s early work producing econometric models is an excellent example. Here’s how Keynes concludes his critical review:

No one could be more frank, more painstaking, more free from subjective bias or parti pris than Professor Tinbergen. There is no one, therefore, so far as human qualities go, whom it would be safer to trust with black magic. That there is anyone I would trust with it at the present stage or that this brand of statistical alchemy is ripe to become a branch of science, I am not yet persuaded. But Newton, Boyle and Locke all played with alchemy. So let him continue.

I love this quote, especially for the tongue-in-cheek invocation of physics. As Mirowski and others have alleged, Physices in the late 19th and 20th century suffered from a heavy case of physics envy. Here, Keynes points to the greatest physicist of them all and says, remember how he was kind of nuts and played with alchemy a lot? It does a lot of rhetorical work very quickly – both praising and dismissing Tinbergen, while opening up the possibility that such work will be necessary to actually set economics on scientific footing (even if it is itself absolutely unscientific).

Ray Bradbury on Sociology: “That way lies melancholy.”

Ray Bradbury passed away today at the age of 91. Bradbury holds many distinctions, among them, authoring my favorite quote from literature about sociology. Here it is, from his dystopic novel Fahrenheit 451:

‎”Give the people contests they win by remembering the words to more popular songs or the names of state capitals or how much corn Iowa grew last year. Cram them full of non-combustible data, chock them so damned full of ‘facts’ they feel stuffed, but absolutely ‘brilliant’ with information. Then they’ll feel they’re thinking, they’ll get a sense of motion without moving. And they’ll be happy, because facts of that sort don’t change. Don’t give them any slippery stuff like philosophy or sociology to tie things up with. That way lies melancholy.”

I only read Fahrenheit 451 as an adult, and haven’t read too many other works by Bradbury, so instead of sharing more of my own thoughts, I’ll just link to a few of my favorite remembrances and such around the ‘net.

Here’s the NYTimes obituary.

Ta-Nehisi Coates at the Atlantic cites a moving Bradbury quote on his literary influences:

INTERVIEWER: You seem to have been open to a variety of influences.
BRADBURY: A conglomerate heap of trash, that’s what I am. But it burns with a high flame.

SF author John Scalzi reposts an introduction he wrote for a new edition of the Martian Chronicles:

Ray Bradbury’s words are not a cardboard container for his ideas. His words have weight and rhythm and pace and form; they are a scaffold of filigree for his ideas to weave themselves in and around, taking form through them. Bradbury’s people did not exist for the sake of exposition or simply to have things happen to them: He sketched them in what they said (or didn’t say), and how they said them or not. Words gave rise to character, economically but fully revealing a spaceman disgusted with his people, two strangers from different times meeting on a road, a man who learns he’s okay being alone, a father teaching his children about who the Martians truly are.

Letters of Note posted a letter from Ray Bradbury about the writing of Fahrenheit 451 (well, it’s precursor novella, “The Fireman”) in the basement of a library:

I discovered there was a typing room where you could rent a typewriter for ten cents a half hour. I moved into the typing room along with a bunch of students and my bag of dimes, which totaled $9.80, which I spent and created the 25,000 word version of “The Fireman” in nine days. How could I have written so many words so quickly? It was because of the library. All of my friends, all of my loved ones, were on the shelves above and shouted, yelled and shrieked at me to be creative.

Finally, two video clips not posted today but that I thought were appropriate. The first is from the West Wing, a scene where a young Jed Bartlett is confronted by his father about an editorial he wrote criticizing his school for banning books:

And the last is a Hugo-nominated fan music video expressing a decidedly non-Platonic love for Ray Bradbury. Very NSFW, and mildly offensive to those of us who loved Vonnegut (just kidding!), but still brilliant:

Rest in Peace.

Alien Visualization QOTD: Herbert Simon on Organizations and Markets

Cosma Shalizi has a breathtaking analysis of the computational impossibility of a perfectly planned central economy, inspired in part by Crooked Timber’s forum on the novel Red Plenty, a work of historical (science) fiction about central planning. In the essay, which I cannot recommend highly enough, Shalizi cites a 1991 Herbert Simon article to make a point about the central place of large organizations in actually existing socialist and capitalist economies. Here’s the delightful quote:

Suppose that [“a mythical visitor from Mars”] approaches the Earth from space, equipped with a telescope that revels social structures. The firms reveal themselves, say, as solid green areas with faint interior contours marking out divisions and departments. Market transactions show as red lines connecting firms, forming a network in the spaces between them. Within firms (and perhaps even between them) the approaching visitor also sees pale blue lines, the lines of authority connecting bosses with various levels of workers. As our visitors looked more carefully at the scene beneath, it might see one of the green masses divide, as a firm divested itself of one of its divisions. Or it might see one green object gobble up another. At this distance, the departing golden parachutes would probably not be visible.
No matter whether our visitor approached the United States or the Soviet Union, urban China or the European Community, the greater part of the space below it would be within green areas, for almost all of the inhabitants would be employees, hence inside the firm boundaries. Organizations would be the dominant feature of the landscape. A message sent back home, describing the scene, would speak of “large green areas interconnected by red lines.” It would not likely speak of “a network of red lines connecting green spots.”

How brilliant? As an extended metaphor, it makes much the same point as Perrow’s phrase “society of organizations”, but nicely contrasts that society with the image we have of living in a market society. Also, according to Shalizi, Simon was color-blind, which makes the quote even more impressive!

Remix Culture 1.0: Twain to Keller on Plagiarism

Remix Culture is a term popularized by Lawrence Lessig to describe how we continuously reinvent and reuse bits of culture. The most obvious examples are song remixes, mash-ups, fan music videos, and the like. Lessig argues that copyright laws should be reformed to make such remixes easier for fans to produce and distribute. It turns out that Mark Twain held a quite similar opinion, as laid out in a letter he sent to Helen Keller in response to learning of an allegation of plagiarism against her based on the similarities between a story she had published and an earlier work. Here’s Twain:

Oh, dear me, how unspeakably funny and owlishly idiotic and grotesque was that “plagiarism” farce! As if there was much of anything in any human utterance, oral or written, except plagiarism! The kernel, the soul—let us go further and say the substance, the bulk, the actual and valuable material of all human utterances—is plagiarism For substantially all ideas are second-hand, consciously and unconsciously drawn from a million outside sources, and daily use by the garnerer with a pride and satisfaction born of the superstition that he originated them; whereas there is not a rag of originality about them anywhere except the little discoloration they get from his mental and moral calibre and his temperament, and which is revealed in characteristics of phrasing. When a great orator makes a great speech you are listening to ten centuries and ten thousand men—but we call it his speech, and really some exceedingly small portion of it is his. But not enough to signify. It is merely a Waterloo. It is Wellington’s battle, in some degree, and we call it his; but there are others that contributed. It takes a thousand men to invent a telegraph, or a steam engine, or a phonograph, or a telephone or any other important thing—and the last man gets the credit and we forget the others. He added his little mite—that is all he did. These object lessons should teach us that ninety-nine parts of all things that proceed from the intellect are plagiarisms, pure and simple; and the lesson ought to make us modest. But nothing can do that.

The whole letter, posted on the fantastic blog Letters of Note, is worth a read.

Solow on Physics Envy QOTD

While looking into the history of economics textbooks, I came across an excellent essay by eminent macroeconomist Robert Solow, “How Did Economics Get That Way and What Way Did It Get?” (Daedalus, 1997). The essay argues that outside observers have misunderstood the trend of economics from the 1940s to 1990s. Economics has not become more formal, Solow argues, but rather more technical, and especially more concerned with models:

Many observers in the other social sciences and in the wide, wide world perceive that economics has become formalistic, abstract, negligent of the real world. The truth is, I think, that economics has become technical, which is quite different. … Far from being unworldly, modern model-builders are obsessed with data. (47)

Ignoring, for a moment, whether the “design-based approach” of folks like David Card represents a counter to this trend, Solow presents several interesting consequences of this reliance on models rather than formalism of axiomatic variety (like geometry). First, as mentioned in the quote, economists encounter the real world frequently through their obsession with data (and, I would add, through “stylized facts”). Solow argues that data cry out to be modeled – the proliferation of quantitative data at the national and individual level in the Depression and post-War eras led to a proliferation of potential facts to be modeled.

Second, Solow argues that this focus on models also makes it difficult for economists to make use of the work of economic sociologists (and, perhaps retrospectively, of institutional economics who were not so model-obsessed). Some economists want to escape the straight-jacket of rationality qua constrained maximization, but they have trouble taking the insights of scholars like Jon Elster and Mark Granovetter and producing from them simplified models. In regard to this point, I wonder if the move towards the design-based approach mentioned above might bring economists and economic sociologists closer together. If economists, to some extent, abandon explicit models then they might learn to see the implicit models in the work of economic sociologists more clearly, and in turn to appreciate that work. Conversely, economic sociologists have (in some sense) more and less to fear from the design-based studies. The findings of these papers, much like the pioneering work in econ soc, contradict all sorts of simplistic notions of all-knowing, selfish, asocial, income/wealth/somethingsomething maximizing rational actors swimming in perfect markets – score one for econ soc! On the other hand, if economists recognize these problems and abandon some of the most intractable root assumptions in the practical work, what’s left of the economic sociology critique? A similar discussion occurred in the econ soc workshop here at Michigan around the emergence and acceptance of behavioral economics. Behavioral econ, though influenced more by cognitive science and psychology than sociology, is much harder to critique with the 1980s econ soc toolkit. So, lots of opportunities for econ soc to make positive contributions that get picked up by a broader intellectual community, but also risks of being swept into obscurity and irrelevance (or, even more obscurity and irrelevance!).

Anyway, back to Solow. Solow ends his essay with a discussion of physics envy in economics and two dangers thereof, which leads to our quote of the day:

“To the extent that economists have the ambition to behave like physicists, they face two dangerous pitfalls. The first is the temptation to believe that the laws of economics are like the laws of physics: exactly the same everywhere on earth and at every moment since Hector was a pup. That is certainly true about the behavior of heat and light. But the part of economics that is independent of history and social context is not only small but dull.” (56, emphasis added)

I really like that quote. I think it captures so much of what’s wrong with envying physics – physics, in some sense, is much easier than economics because the relationships you are interested in today are likely not going to change tomorrow, and presumably held for the last hundreds of years (if not billions!). This has all sorts of implications for the ability to generalize from economic experiments, and more broadly, for a need for some humility in attempting to apply economic insights across very diverse times and places. Which, in turn, contrasts with Solow’s second pitfall from physics envy: the “tendency to undervalue keen observation and shrewd generalization.”

A fun essay by a keen observer and shrewd generalizer; highly recommended.

PS I couldn’t help but reprint this quote as well, which may need to serve as an epigraph in the diss somewhere: “There is a tendency for theory to outrun data. … Theory is cheap, and data are expensive.”

Dystopic QOTD: Huxley to Orwell on Hypnosis and Governance

Letters of Note is a fantastic blog that posts fascinating, inspiring and sometimes frightening bits of correspondence, often between famous writers. Today’s offering is a letter from Aldous Huxley to George Orwell following the publication of 1984. Huxley praises Orwell’s book, but argues that government will not need to use such forceful means (“boot-on-the-face”) to maintain order. Rather, Huxley argues that hypnosis and drugs will solve the problem of creating an subservient public:

Within the next generation I believe that the world’s rulers will discover that infant conditioning and narco-hypnosis are more efficient, as instruments of government, than clubs and prisons, and that the lust for power can be just as completely satisfied by suggesting people into loving their servitude as by flogging and kicking them into obedience. In other words, I feel that the nightmare of Nineteen Eighty-Four is destined to modulate into the nightmare of a world having more resemblance to that which I imagined in Brave New World. The change will be brought about as a result of a felt need for increased efficiency.

While we can dispute the emphasis on hypnosis per se (Huxley goes so far as to argue that government was delayed from becoming so totalitarian for 5 or 6 generations because reputable scientists refused to investigate hypnosis in the 19th century, and thus governments were delayed in their access to such tools), Huxley’s analysis of the tendency of government to produce subservience by seemingly non-violent means with the goal of enhanced efficiency resonates with Foucault’s thesis in Discipline & Punish, along with other critical takes on modernity.

Huxley does conclude his letter with one out from the Brave New World dystopia – the victory of violence on a grand scale:

Meanwhile, of course, there may be a large scale biological and atomic war — in which case we shall have nightmares of other and scarcely imaginable kinds.

Happy Tuesday!

Also, has anyone tried teaching dystopias and social theory? That could make a fun syllabus – a variant of the sci-fi and social theory class I’ve been pondering for a few years.

Sociology Quote of the Day: JLM on Mechanisms

I’m not a huge fan of the language of mechanisms. In a blog post today, John Levi Martin found just the words I’d been searching for, and now I’m going to run out and buy his newish book, The Explanation of Social Action. JLM’s post comes as a response to Dan Little’s critique of the book (critique here). JLM and Little disagree about whether or not we should engage in causal analysis at a supra-individual level, “‘Why?’ questions [that] involve understanding the workings of institutions and structures.” In his response, JLM unpacks his own problem with so-called causal mechanisms:

The problems with our desperate belief in causation even where it adds nothing but confusion is best seen in the line of work emphasized by Little on causal “mechanisms.” I did not devote any of ESA to a critique of these ideas in part because I believed that my general points were best made without “going negative,” because I believed that Tilly’s approach to explanation was an improvement over most others, and because of my great admiration for and gratitude to Charles Tilly. This opened space for confusion.

Tilly identifies recurring patterns of social action and calls these “mechanisms” because they can be envisaged as discrete parts of a clockwork that, assembled in a certain way, will produce a certain result. In itself, this is a laudable endeavor; the word “mechanism” to describe the pattern nicely highlights the modular nature of these explanatory nuggets, at the cost of some misleading imagery. But to call these accounts “causal” and to argue that this demonstrates the stability of TPC seems very puzzling. For the mechanisms themselves are nothing other than patterns of action. They do not explain the action, they are it.

Although I am not sure yet if I agree with JLM’s approach (not yet having read the book!), I find his summary and critique of the mechanisms approach pitch-perfect. I highly recommend Little’s summary and critique of JLM’s book, and the response.