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Passion for studying history and philosophy of science & religion and everything in between.

Diamonds are Bullshit

Nineteenth-century economists liked to illustrate the importance of scarcity to value by using the water and diamond paradox. Why is water cheap, even though it is necessary for human life, and diamonds are expensive and therefore of high value, even though humans can quite easily get by without them? Marx’s labour theory of value–naïvely applied–would argue that diamonds simply take a lot more time and effort to produce. But the new utility theory of value, as the marginalists defined it, explained the difference in price through the scarcity of diamonds. Where there is an abundance of water, it is cheap. Where there is a scarcity (as in a desert), its value can become very high. For the marginalists, this scarcity theory of value became the rationale for the price of everything, from diamonds, to water, to workers’ wages.

The idea of scarcity became so important to economists that in the early 1930s it prompted one influential British economist, Lionel Robbins (1898–1984), Professor of Economics at the London School of Economics, to define the study of economics itself in terms of scarcity; his description of it as ‘the study of the allocation of resources, under conditions of scarcity’ is still widely used.8 The emergence of marginalism was a pivotal moment in the history of economic thought, one that laid the foundations for today’s dominant economic theory.

Mariana Mazzucato (2018, 64-65) The Value of Everything

The Manufacturing of Scarcity qua Market Manipulation

American males enter adulthood through a peculiar rite of passage: they spend most of their savings on a shiny piece of rock. They could invest the money in assets that will compound over time and someday provide a nest egg. Instead, they trade that money for a diamond ring, which isn’t much of an asset at all. As soon as a diamond leaves a jeweler, it loses over 50% of its value. (Priceonomics 2014, 3)

We exchange diamond rings as part of the engagement process because the diamond company De Beers decided in 1938 that it would like us to. Prior to a stunningly successful marketing campaign, Americans occasionally exchanged engagement rings, but it wasn’t pervasive. Not only is the demand for diamonds a marketing invention, but diamonds aren’t actually that rare. Only by carefully restricting the supply has De Beers kept the price of a diamond high. (Priceonomics 2014, 3)

Countless American dudes will attest that the societal obligation to furnish a diamond engagement ring is both stressful and expensive. But this obligation only exists because the company that stands to profit from it willed it into existence. (Priceonomics 2014, 3)

So here is a modest proposal: Let’s agree that diamonds are bullshit and reject their role in the marriage process. Let’s admit that we as a society were tricked for about a century into coveting sparkling pieces of carbon, but it’s time to end the nonsense. (Priceonomics 2014, 3-4)

The Concept of Intrinsic Value

In finance, there is concept called intrinsic value. An asset’s value is essentially driven by the (discounted) value of the future cash that asset will generate. For example, when Hertz buys a car, its value is the profit Hertz will earn from renting it out and selling the car at the end of its life (the “terminal value”). For Hertz, a car is an investment. When you buy a car, unless you make money from it somehow, its value corresponds to its resale value. Since a car is a depreciating asset, the amount of value that the car loses over its lifetime is a very real expense you pay. (Priceonomics 2014, 4)

A diamond is a depreciating asset masquerading as an investment. There is a common misconception that jewelry and precious metals are assets that can store value, appreciate, and hedge against inflation. That’s not wholly untrue. (Priceonomics 2014, 4)

Gold and silver are commodities that can be purchased on financial markets. They can appreciate and hold value in times of inflation. You can even hoard gold under your bed and buy gold coins and bullion (albeit at approximately a 10% premium to market rates). If you want to hoard gold jewelry, however, there is typically a 100-400% retail markup. So jewelry is not a wise investment. (Priceonomics 2014, 4)

But with that caveat in mind, the market for gold is fairly liquid and gold is fungible — you can trade one large piece of gold for ten smalls ones like you can trade a ten dollar bill for ten one dollar bills. These characteristics make it a feasible investment. (Priceonomics 2014, 4)

Diamonds, however, are not an investment. The market for them is not liquid, and diamonds are not fungible. (Priceonomics 2014, 4-5)

The first test of a liquid market is whether you can resell a diamond. In a famous piece published by The Atlantic in 1982, Edward Epstein explains why you can’t sell used diamonds for anything but a pittance:

“Retail jewelers, especially the prestigious Fifth Avenue stores, prefer not to buy back diamonds from customers, because the offer they would make would most likely be considered ridiculously low. The ‘keystone,’ or markup, on a diamond and its setting may range from 100 to 200 percent, depending on the policy of the store; if it bought diamonds back from customers, it would have to buy them back at wholesale prices. Most jewelers would prefer not to make a customer an offer that might be deemed insulting and also might undercut the widely held notion that diamonds go up in value. Moreover, since retailers generally receive their diamonds from wholesalers on consignment, and need not pay for them until they are sold, they would not readily risk their own cash to buy diamonds from customers.” (Priceonomics 2014, 5)

When you buy a diamond, you buy it at retail, which is a 100% to 200% markup. If you want to resell it, you have to pay less than wholesale to incent a diamond buyer to risk her own capital on the purchase. Given the large markup, this will mean a substantial loss on your part. The same article puts some numbers around the dilemma: (Priceonomics 2014, 5-6)

(….) We like diamonds because Gerold M. Lauck told us to. Until the mid 20th century, diamond engagement rings were a small and dying industry in America, and the concept had not really taken hold in Europe. (Priceonomics 2014, 7)

Not surprisingly, the American market for diamond engagement rings began to shrink during the Great Depression. Sales volume declined and the buyers that remained purchased increasingly smaller stones. But the U.S. market for engagement rings was still 75% of De Beers’ sales. With Europe on the verge of war, it didn’t seem like a promising place to invest. If De Beers was going to grow, it had to reverse the trend. (Priceonomics 2014, 7)

And so, in 1938, De Beers turned to Madison Avenue for help. The company hired Gerold Lauck and the N. W. Ayer advertising agency, which commissioned a study with some astute observations. Namely, men were the key to the market. As Epstein wrote of the findings:

“Since ‘young men buy over 90% of all engagement rings’ it would be crucial to inculcate in them the idea that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. Similarly, young women had to be encouraged to view diamonds as an integral part of any romantic courtship” (Priceonomics 2014, 7)

(….) The next time you look at a diamond, consider this: nearly every American marriage begins with a diamond because a bunch of rich white men in the 1940s convinced everyone that its size determines a man’s self worth. They created this convention — that unless a man purchases (an intrinsically useless) diamond, his life is a failure — while sitting in a room, racking their brains on how to sell diamonds that no one wanted. (Priceonomics 2014, 8)

A History of Market Manipulation

(….) What, you might ask, could top institutionalizing demand for a useless product out of thin air? Monopolizing the supply of diamonds for over a century to make that useless product extremely expensive. You see, diamonds aren’t really even that rare. (Priceonomics 2014, 10)

Before 1870, diamonds were very rare. They typically ended up in a Maharaja’s crown or a royal necklace. In 1870, enormous deposits of diamonds were discovered in Kimberley, South Africa. As diamonds flooded the market, the financiers of the mines realized they were making their own investments worthless. As they mined more and more diamonds, they became less scarce and their price dropped. (Priceonomics 2014, 10)

The diamond market may have bottomed out were it not for an enterprising individual by the name of Cecil Rhodes. He began buying up mines in order to control the output and keep the price of diamonds high. By 1888, Rhodes controlled the entire South African diamond supply, and in turn, essentially the entire world supply. One of the companies he acquired was eponymously named after its founders, the De Beers brothers. (Priceonomics 2014, 10)

Building a diamond monopoly isn’t easy work. It requires a balance of ruthlessly punishing and cooperating with competitors, as well as a very long term view. For example, in 1902, prospectors discovered a massive mine in South Africa that contained as many diamonds as all of De Beers’ mines combined. The owners initially refused to join the De Beers cartel, and only joined three years later after new owner Ernest Oppenheimer recognized that a competitive market for diamonds would be disastrous for the industry. In Oppenheimer’s words: (Priceonomics 2014, 10-11)

“Common sense tells us that the only way to increase the value of diamonds is to make them scarce, that is to reduce production.” (Priceonomics 2014, 11)

(….) We covet diamonds in America for a simple reason: the company that stands to profit from diamond sales decided that we should. De Beers’ marketing campaign single handedly made diamond rings the measure of one’s success in America. Despite diamonds’ complete lack of inherent value, the company manufactured an image of diamonds as a status symbol. And to keep the price of diamonds high, despite the abundance of new diamond finds, De Beers executed the most effective monopoly of the 20th century. (Priceonomics 2014, 13)

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The history of De Beers’ ruthless behavior in its drive to maintain its monopoly is well documented. There were so successful at creating a market in monopoly that eventually such a monstrosity as blood diamonds could exist. But that is another story. The moral of the story is that when it comes to capitalism there is really no such thing as intrinsic value or a “free market,” and that slick marketing can make a terd sell for the price of diamond.

Upon this market manipulation economists built a house of cards that overlooked the monopolist’s manipulations and instead claimed diamonds are expensive because they are rare. Diamonds are bullshit and by extension so too is modern economics theory of scarcity largely bullshit too.

Sack the Economists

And Disband the Departments of The Walking Dead

In 1994 Paul Ormerod published a book called The Death of Economics. He argued economists don’t know what they’re talking about. In 2001 Steve Keen published a book called Debunking Economics: the naked emperor of the social sciences, with a second edition in 2011 subtitled The naked emperor dethroned?. Keen also argued economists don’t know what they’re talking about. (Davies 2015, 1)

Neither of these books, nor quite a few others, has had the desired effect. Mainstream economics has sailed serenely on its way, declaiming, advising, berating, sternly lecturing, deciding, teaching, pontificating. Meanwhile half of Europe and many regions and groups in the United States are in depression, and fascism is making a comeback. The last big depression spawned Hitler. This one is promoting Golden Dawn in Greece and similar extremist movements elsewhere. In the anglophone world a fundamentalist right-wing ideology is enforcing an increasingly narrow political correctness centred on “free” markets and the right of the rich to do and say whatever they like. “Freedom”, but only for some, and without responsibility. (Davies 2015, 1-2)

Evidently Ormerod and Keen were too subtle. It’s true their books also get a bit technical at times, especially Keen’s, but then they were addressing the profession, trying to bring it to its senses, to reform it from the inside. That seems to have been their other mistake. They produced example after example of how mainstream ideas fail, but still they had no effect. I think the message was addressed to the wrong audience, and was just too subtle. Economics is naked and dead, but never mind the stink, just prop up the corpse and carry on. (Davies 2015, 2)

Oh, but look! The corpse is moving. It’s getting up and walking. Time to call in John Quiggin, author of Zombie Economics: how dead ideas still walk among us. Perhaps he’ll show us how to shoot it in the head, or whatever it takes to finally stop a zombie. (Davies 2015, 2)

Well, I think it’s clear we can’t be too subtle. We need to speak in plain English, to everyone, and get straight to the point. Economists don’t know what they’re talking about. We should remove economists from positions of power and influence. Get them out of treasuries, central banks, media, universities, where ever they spread their baleful ignorance. (Davies 2015, 2)

Economists don’t know how businesses work, they don’t know how financial markets work, they can’t begin to do elementary accounting, they don’t know where money comes from nor how banks work, they think private debt has no effect on the economy, their favourite theory is a laughably irrelevant abstraction and they never learnt that mathematics on its own is not science. They ignore well-known evidence that clearly contradicts their theories. (Davies 2015, 2-3)

Other academics should look into this discipline called economics that lurks in their midst. Practitioners of proper academic rigour, like historians, ecologists, physicists, psychologists, systems scientists, engineers, even lawyers, will be shocked. Academic economics is an incoherent grab bag of mathematical abstraction, assertion, failure to heed observations, misrepresentation of history and sources, rationalisation of archaic money-lending practices, and wishful thinking. It missed the computational boat that liberated other fields from old analytical mathematics and overly-restrictive assumptions. It is ignorant of major fields of modern knowledge in biology, ecology, psychology, anthropology, physics and systems science. (Davies 2015, 3)

Though many economists themselves may not realise it, economics is an ideology rationalised by a dog’s breakfast of superficial arguments and defended by dense thickets of jargon and arcane mathematics. The ideology is an old one: the rich and powerful know best, the rest of us are here to serve them. (Davies 2015, 3)

Power to Choose the Mismeasure of Humanity

If you push enough oats into a horse some will spill out and feed the sparrows.

Horse and Sparrow Economic Theory

The rich man may feast on caviar and champagne, while the poor women starves at his gate. And she may not even take the crumbs from his table, if that would deprive him of his pleasure in feeding them to his birds.

Gauthier 1986, 218, Morals by Agreement, Oxford University Press

The power to choose the measure of success

The successful campaign to eliminate distributional issues from the core of the economic discipline has its mirror image in the popularity of GDP as the measure of economic success of a nation. While the pioneer of national accounting (i.e., GDP), Simon Kusnetz, explicitly said that GDP should not be used as a measure of welfare, and few economists would explicitly advocate such use, it is also true that economists as a group have done precious little to counter the popular opinion that growth, in the sense of maximization of GDP, should be the main goal of economic policy.

GDP is the money value of final goods and services that an economy produces in a quarter or a year (i.e., not including those goods and services used as inputs in production of other goods and services). This definition makes it … a reasonable yardstick of how much money moved around in a quarter or a year, and therefore captures to some extent how much economic activity in money terms there was in that period. It is a poor measure of actual activity in absolute terms due to using money rather than physically measuring human activity or indicators of human activity (e.g., how many tons of material were moving around in a year, or how many bits of information were exchanged in a year). Some activity that commands a large premium in money terms for institutional reasons, like investment banking, even if it is only one powerful person doing a moderate amount of work, will count the same as activities of hundreds of factory workers and much more than the activity of millions of housewives. Societal changes like providing more institutional childcare or reigning in the market power of investment banks can make a huge difference in terms of measured GDP, without significantly changing the actual activities performed. Because of this reliance on using money valuations, GDP has severe issues with accurately measuring technological progress. (Häring et. al. 2012, 28-29)

This method of measuring economic activity has two things going for it. It makes the mathematics a lot easier than measuring in a sensible way. And it conforms with the implicit assumptions if mainstream economics that an extra dollar is worth the same to a poor person than it is to a rich person, just as it makes no differentiation between types of activity, for instance whether they are good (i.e., charitable work) or bad (i.e. criminal activity). If a hedge fund manager makes five billion dollars in a good year, as John Paulson reportedly did in 2010 (Burton and Kishan 2011), this is must as good in GDP terms as 13.7 million people living on a dollar a day doubling their incomes. (Häring et. al. 2012, 29)

Policies that treat human beings as social creatures and try to reach the best results in the most important dimensions of human goals cannot flag their success with equally prominent and simple statistical measures like a single number where higher is “better.” The rich and wealthy benefit most from this way of measuring the economic success of a nation, since it de-emphasizes the gains of the mass low-income people relative to those of a minority if rich people. As far as nations are concerned, it benefits nations that champion the policies favored by this approach, with the US being foremost among these. (Häring, Norbert and Douglas Nial. Economists and the Powerful [Convenient Theories, Distorted Facts, Ample Rewards]. New York: Anthem Press; 2012; pp. 28-29.)

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LET’S STOP PRETENDING UNEMPLOYMENT IS VOLUNTARY

Unless you have a PhD in economics, you probably think it uncontroversial to argue that we should be concerned about the unemployment rate. Those of you who lost a job, or who have struggled to find a job on leaving school, college, or a university, are well aware that unemployment is a painful and dehumanizing experience. You may be surprised to learn that, for the past thirty-five years, the models used by academic economists and central bankers to understand how the economy works have not included unemployment as a separate category. In almost every macroeconomic seminar I attended, from 1980 through 2007, it was accepted that all unemployment is voluntary. (Farmer 2017, 47)

In 1960, almost all macroeconomists talked about involuntary unemployment and they assumed, following Keynes, the quantity of labor demanded is not equal to the quantity of labor supplied. That view of economics was turned on its head, almost single-handedly, by Robert Lucas. Lucas persuaded macroeconomists that it makes no sense to talk about disequilibrium in any market and he initiated a revolution in macroeconomics that reformulated the discipline using pre-Keynesian classical assumptions. (Farmer 2017, 47)

The idea that all unemployment is voluntary is called the equilibrium approach to labor markets. Lucas wrote his first article on this idea in 1969 in a coauthored paper with Leonard Rapping. His ideas received a big boost during the 1980s when Finn Kydland, Edward C. Prescott, Charles Long, and Charles Plosser persuaded macroeconomists to use a mathematical approach, called the Ramsey growth model, as a new paradigm for business cycle theory. The theory of real business cycles, or RBCs, was born. According to this theory, we should think about consumption, investment, and employment “as if” they were the optimal choices of a single representative agent with superhuman perception of the probabilities of future events. (Farmer 2017, 47-48)

Mismeasure of Homo Economicus

Of the total employment growth in the US between 2005 and 2015, insecure employment in the categories of independent contractors, on-call workers and workers provided by contracting companies or temp agencies accounted for fully 94 percent.3a Outsourcing of employment plays a big role in what David Weil describes as the “fissuring” of the workplace — depressing wages, magnifying income and wealth inequality, and generating a pervasive sense on the part of those at the wrong end of the fissuring that the world is cheating them, making them angry in return.4 On top of this, many Trump voters are angry that the government is giving handouts to “shirkers”, and sticking them with the tax bill. (Fullbrook et. at. 2017, 65-66. Is Trump wrong on trade? A partial defense based on production and employment. In Trumponomics: Causes and Consequences.)

(….) [P]romotion of the low bar temporary contract or part-time “gig” jobs which comprised over 90% of Obama’s boasted job creation.20 (Fullbrook et. al. 2017, 210. Donald Trump, American political economy and the “terrible simplificateurs.” In Trumponomics: Causes and Consequences.)

The US might be less rich than official statistics make us believe…. After all, measuring GDP is an art as much as a science. What is usually portrayed as a straight forward act of objective measurement involves value judgments and much guesswork.

— Häring et. al. 2012, 33-34, in Economists and the Powerful
Power to measure success …

(….) These conventional metrics [i.e., GDP, misleading and deceptive unemployment metrics, etc.], however, ignored the fact that the QUALITY of the jobs was poor….. And the unemployment data ignores the quality of the types of jobs being created. Recent research by Professors Lawrence Katz of Harvard and Alan Krueger of Princeton based on non-labor force survey data (private sampling) suggests that “all of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements.”3 That is standard jobs with predictable income, pension benefits and health care coverage, have disappeared and are being replaced by more precarious contract work and other types of alternative working arrangements. Quantifying this trend, the authors conclude the following:

“The increase in the share of workers in alternative work arrangements from 10.1 percent in 2005 to 15.8 percent in 2015 implies that the number of workers employed in alternative arrangement increased by 9.4 million (66.5 percent), from 14.2 million in February 2005 to 23.6 million in November 2015.”

Thus, these figures imply that employment in traditional jobs (standard employment arrangements) slightly declined by 0.4 million (0.3 percent) from 126.2 million in February 2005 to 125.8 million in November 2015. Unfortunately, we cannot determine the extent to which the replacement of traditional jobs with alternative work arrangements occurred before, during or after the Great Recession. (Fullbrook et. at. 2017, 326-327. Explaining the rise of Donald Trump. In Trumponomics: Causes and Consequences.)

(….) The final change I want to draw attention to is the increasing precarity of the U.S. working-class. They’re increasingly employed in part-time jobs … and in “alternative” work arrangements. As Lawrence Katz and Alan Krueger (2016) ahve shown, just in the past decade, the percentage of American workers engaged in alternative work arrangements — defined as temporary help agency workers, on-call workers, contract workers, and independent contractors or freelancers — rose from 10.1 percent (in February 2005) to 15.8 percent (in late 2015). And it turns out, the so-called gig economy is characterized by the same unequalizing, capital-labor dynamics as the rest of the U.S. economy.

What is clear from this brief survey of the changes in the condition of the U.S. working-class in recent decades is that, while American workers have created enormous additional income and wealth, most of the increase has been captured by their employers and a tiny group at the top as workers have been forced to compete with one another for new kinds of jobs, with fewer protections, at lower wages, and with less security than they once expected. And the period of recovery from the Second Great Depression has done nothing to change that fundamental dynamic. (Fullbrook et. at. 2017, 350-351. Class an Trumponomics. In Trumponomics: Causes and Consequences.)

Notes

3a Lawrence Katz and Alan Krueger, 2016, “The rise and nature of alternative work arrangements in the US, 1995-2015”, March 29. By the end of 2015, workers in the authors ‘alternative ‘ employment constituted 16 percent of total workers. (Fullbrook et. al., 2017, 66)
3b https://krueger.princeton.edu/sites/default/files/akrueger/files/katz_krueger_cws__march_29_20165.pdf
4 David Weil, 2014, The Fissured Workplace: Why Work Became So Bad For So Many and What Can Be Done To Improve It, Harvard University Press.
20 “Nearly 95% of New Jobs During Obama Era were Contract, or Part Time.” Investing.com, 21 December 2016. Accessed at https://www.investing.com/news/economy-news/nearly-95-of-all-job-growth-during-obama-era-part-time,-contract-work-449057

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[T]he jobs shifted away to be done by separate employers pay low wages; provide limited or often no health care, pension, or other benefits; and offer tenuous job security. Moreover, workers in each case received pay or faced workplace conditions that violated one or more workplace laws…. In the late 1980s and early 1990s, many companies, facing increasingly restive capital markets, shed activities deemed peripheral to their core business models: out went janitors, security guards, payroll administrators, and information technology specialists…. Even lawyers who handle our business transactions and consultants who work for well-known accounting companies may now have an arm’s-length relationship with those whom we think they are employed. By shedding direct employment, lead business enterprises select from among multiple providers [i.e., ‘preferred vendors’ as MSFT calls them] of those activities and services formally done inside the organization, thereby substantially reducing costs [they play vendors off of one another based on cost and create what is know in the recruiting/staffing industry ‘the death of the middle man’ race to the bottom] and dispatching the many responsibilities connected to being the employer of record [saving as much as ~30% in employee benefits no longer paid]. Information and communication technologies have enabled this hidden transformation of work…. By shedding employment to other parties, lead companies change a wage-setting problem into a contracting [and price] decision. The result is stagnation of real wages [and loss of employee benefits] for many of the jobs formerly done inside.

Weil 2014, 3-4

David Weil’s book The Fissured Workplace sheds light on the extent and nature of this “shedding” of employees by corporations. The evidence shows that increasingly employers are forcing workers into temporary, contract positions, or part-time “gig” jobs in a variety of fields. Female workers suffer most heavily in this new fissured economy, as work in traditionally feminine fields like education and medicine have been declining and shifting to the use of contract workers. The disappearance of conventional full-time work, 9 a.m. to 5 p.m. work, has hit every demographic. Krueger, a former chairman of the White House Council of Economic Advisers, was surprised by the finding. “Workers seeking full-time, steady work have lost,” said Krueger.

But it would be a mistake to believe that the highly skilled and highly educated technology/knowledge workers are immune from this kind of fissuring, for it is continuing apace within the major global technology corporations — know as “lead companies” — like Microsoft, Google, Facebook, Wells Fargo (and banks in general), etc., continuing to lay off entire divisions and groups only to rehire them back as “contingent” workers employed by one of the lead firm’s designated “third party vendors,” or “preferred vendors,” or “partners.” The worker/employer power balance of entire industries can be shifted to favorably give corporations huge advantages by the use of opaque global supply chains that use technological smoke screens and employer delegated deception to hide the real nature of these relationships meant to disadvantage the workers economically.

It is now possible to do to white-collar high-skilled high-education workers what has already been done to blue-collar low-skilled low-educated workers, except now it is no longer necessary to “export” those jobs overseas when such technology workers can be shed by lead corporations and forced to work locally for a “third party vendors” (aka staffing companies) at a sometimes 50% to 60% reduced family income and sometimes with little or no employee benefits (e.g., healthcare, sick days, vacation days, etc.). Yahya under the section “Statement of the Problem” writes:

The emergence of knowledge-based economies (KBEs) in developing countries has the potential to leapfrog these economies to compete in the globalized services sector (Rooney et al., 2003). While reducing labour costs is a main reason for outsourcing, it is not the only driver: other determinants include the need to improve quality of service and providing new services for customers (Kaplan, 2002). The rise of the KBEs also illustrates that the distinction between white collar and blue collar workers is an archaic concept because both categories are subjected to the same conditionalities of business cost reduction and profit maximization. The advance of technological developments increased their commonalities, which made white collar service employment just as vulnerable as blue collar work. The convergence of the Information and Communications Technology (ICT) sector has fuelled economic growth but has increased the displacement of service jobs from developed to developing economies (Rooney et al., 2003). The rise of the global IT industry and the outsourcing of various services to lower-cost developing countries are performed through the spatially unbundling of tasks and relocating them to the most productive locations (Wilson, 1998).

(Yahya 2011, 621, emphasis added)

Yahya is mistaken in his claim this form of the “fissuring workplace” improves quality of service, for it actually reduces the quality of service as evidence has shown. When family wage earners are forced to become “contingent” workers in the “gig” economy they are effectively turned into precarious workers who have far less social security in terms of job stability, wages, and benefits. Typically they are forced to work longer hours for less pay and fewer employee benefits, or sometimes non at all. The twin objectives of “fissuring” — reducing costs and simultaneously improving quality of service — turn out to be a chimera in reality leading to overstressed and underpaid precarious “contingent” workers suffering from increased socio-economic anxiety and workload exhaustion.

This has an overall destabilizing social impact on family wage earners — especially single women with children — and society in general. These “external” costs to families and society are rarely considered within economics typically being treated as “externalities” that are exogenous to econometric analysis. With the decline of the power of unions workers — in all classes and domains, from blue-collar to white-collar — are being subjected to increasing wage suppression tactics much of which is hidden behind intentional lack of transparency and technological smoke screens that give major corporations asymmetrical information advantage over workers in deciding wages and compensation values in the so-called “free market” which is in reality a highly rigged market.

Genuinely Creative Thought

2.2 The evolution of the mind: consciousness, creativity, psychological indeterminacy

If consciousness is accepted as real, it seems reasonable that one would allow for an active consciousness, for us to be aware of the experience of thinking and to engage in that experience. If we didn’t allow for engaged and active thought in consciousness, then consciousness would seem to be a passive “ghost in the machine” sort of consciousness. Siegel (2016) would appear to be in agreement with this notion insofar as he sees the mind as a conscious regulator of energy and information flow. But if we allow consciousness to be real in this manner, we allow the possibility of thoughts which exist for no reason other than “we” (the phenomenological “I” (Luijpen, 1969)) think them consciously and actively. The existence of such a thought does not itself break the principle of sufficient reason (Melamed and Lin, 2015), but the “I” thinking them might. That the “I” brings into being a conscious thought might be the terminus of a particular chain of causation. (Markey-Towler 2018, 8)

We call such thoughts to exist “genuinely creative thought”, they are thoughts which exist for no reason other than they are created by the phenomenological “I”. The capability to imagine new things is endowed by the conscious mind. This poses a difficulty for mathematical models which by their nature (consisting always of statements A ⇒ B) require the principle of sufficient reason to hold. Active conscious thought, insofar as it may be genuinely creative is indeterminate until it exists. However, that we might not be able to determine the existence of such thoughts before they are extant does not preclude us from representing them once their existence is determined. Koestler (1964) taught that all acts of creation are ultimately acts of “bisociation”, that is, of linking two things together in a manner hitherto not the case. Acts of creation, bisociations made by the conscious mind, are indeterminate before they exist, but once they exist they can be represented as relations Rhh’ between two objects of reality h,h’. We may think of such acts of creation as akin to the a priori synthetic statements of which Kant (1781) spoke. (Markey-Towler 2018, 8)

This is no matter of mere assertion. Roger Penrose (1989) holds, and it is difficult to dismiss him, that the famous theorems of Kurt Gödel imply something unique exists in the human consciousness. The human mind can “do” something no machine can. Gödel demonstrated that within certain logical systems there would be true statements which could not be so verified within the confines of the logical system but would require verification by the human consciousness. The consciousness realises connections in this case truth-values which cannot be realised by the machinations of mathematical logic alone. It creates. The human mind can therefore (since we have seen those connections made) create connections in the creation of mathematical systems irreducible to machination alone. There are certain connections which consciousness alone can make. (Markey-Towler 2018, 9)

The problem of conscious thought goes a little further though. New relations may be presented to the consciousness either by genuinely creative thought or otherwise, but they must be actually incorporated into the mind, Rhh’g(H)μ and take their place alongside others in the totality of thought g(H)μ. Being a matter of conscious thought by the phenomenological “I”, the acceptance or rejection of such relations is something we cannot determine until the “I” has determined the matter. As Cardinal Newman demonstrated in his Grammar of Assent (1870), connections may be presented to the phenomenological “I”, but they are merely presented to the “I” and therefore inert until the “I” assents to them accepts and incorporates them into that individual’s worldview. The question of assent to various connections presented to the “I” is an either/or question Newman recognises is ultimately free of the delimitations of reason and a matter for resolution by the “I” alone. (Markey-Towler 2018, 9)

There are thus two indeterminacies introduced to any psychological theory by the existence of consciousness:

1 Indeterminacy born of the possibility of imagining new relations Rhh’ in genuinely creative thought.
2 Indeterminacy born of the acceptance or rejection by conscious thought of any new relation Rhh’ and their incorporation or not into the mind μg(H). (Markey-Towler 2018, 9)

The reality of consciousness thus places a natural limit on the degree to which we can determine the processes of the mind, determine those thoughts which will exist prior to their existence. For psychology, this indeterminacy of future thought until its passage and observance is the (rough) equivalent of the indeterminacy introduced to the physical world by Heisenberg’s principle, the principle underlying the concept of the “wave function” upon which an indeterminate quantum mechanics operates (under certain interpretations (Kent, 2012; Popper, 1934, Ch.9)). (Markey-Towler 2018, 9-10)

2.3 Philosophical conclusions

We hold to the following philosophical notions in this work. The mind is that element of our being which experiences our place in the world and relation to it. We are conscious when we are aware of our place in and relation to the world. We hold to a mix of the “weak Artificial Intelligence” and mystic philosophies that mind is emergent from the brain and that mind, brain and body constitute the individual existing in a monist reality. The mind is a network structure μ = {H g(H)} expressing the connections g(H) the individual construes between the objects and events in the world H, an architecture within which and upon which the psychological process operates. The reality of consciousness introduces an indeterminacy into that architecture which imposes a limit on our ability to determine the psychological process. (Markey-Towler 2018, 10)

~ ~ ~

My own philosophical views differ from the assumptions underlying Markey-Towler. To say that “mind is emergent from the brain and that mind, brain and body constitute the individual existing in a monist reality,” is essentially a form of physical monism that claims mind “emerged” from matter, which really explains nothing. If the universe (and humans) are merely mechanisms and mind is reducible to matter we would never be able to be aware of our place in and relation to the universe nor would there ever be two differing philosophical interpretations of our place in the universe. The hard problem (mind-brain question) in neuroscience remains a debated and unsettled question. There are serious philosophical weaknesses in mechanistic materialism as a philosophical position, as is discussed in Quantum Mechanics and Human Values (Stapp 2007 and 2017).

Origin of Animal Body Plans

Whether you can observe a thing or not depends on the theory which you use. It is the theory which decides what can be observed.

— Albert Einstein, 1926

[Gold reminds us we must not forget] … the striking reformation of evolutionary theory implied by the well-documented genetic and developmental homologies alone. De Robertis expresses this key argument in the final line of his 1997 article on the ancestry of segmentation: “The realization that all Bilateria are derived from a complex ancestor represents a major change in evolutionary thinking, suggesting that the constraints imposed by the previous history of species played a greater role in the outcome of animal evolution than anyone would have predicted until recently.” (Gould 2002: 1152) [De Robertis, E.M. 1997. The ancestory of segmentation. Nature 387: 25-26. See also, De Robertis, E.M., G. Oliver, and C.V.E. Wright. 1990. Homeobox genes and the vertebrate body plan. Scientific American, July, pp. 46-52; De Robertis, E.M., and Y. Sasai. 1996. A common plan for dorsoventral patterning in Bilateria. Nature 380: 37-40.]

(….) Hughes (2000, p. 65) has expressed this cardinal discovery of evo-devo in phyletic and paleontological terms: “It is hard to escape the suspicion that what we witness in the Cambrian is mainly tinkering with developmental systems already firmly established by the time these Cambrian beasts showed up.” (Gould 2002: 1155) [Hughes, N.C. 2000. The rocky road to Mendel’s play. Evol. and Develop. 2: 63-66.]

Gould, Stephen J. The Structure of Evolutionary Theory. Cambridge: Harvard University Press; 2002; p. 1152; 1155.

As it turns out, the miracle of complex life is more amazing, yet ironically simpler, than anyone ever expected. Researchers now know that life’s building materials are few, and they were “invented” near the dawn of animals. More specifically, a surprisingly small number of genes—”tool kit genes”—are the primary components for building all animals, and these genes emerged at a time before the Cambrian Explosion, some 600 million years ago. Thus the amazing diversity of the animal kingdom is the result of the flexibility of a small number of building blocks that have existed for eons.

This means, for example, that the gene that controls the formation of an arm on a human is the same gene that controls the formation of a wing on a bird, a fin on a fish, and a leg on a centipede, and that this gene has been around since the first animals grew the first appendage of any kind. Some prominent scientists have argued that if we could rewind the tape of life and start over again, the result would be a totally different world from that which exists today. They are wrong. Tool kit genes conserve the essence of animals, and they react to ecological cues in very consistent ways [emphasis added].

Carroll, Sean B. Endless Forms Most Beautiful: The New Science of Evo Devo. New York: Norton; 2005: Inside Dustjacket.

We now need to confront the question of whether the biological community or at least the large proportion of it has come to accept a theory of evolution that is based on a broadly parallel error. Our case studies on the action of natural selection all involve microevolutionary changes occurring within particular lineages hundreds of millions of years after the origin of the major body plans of which the species concerned represent variations. Many of these case-studies are well known, especially the evolution of industrial melanism in Biston (Bishop and Cook 1980), the evolution of pigmentation patterns in Cepaea (Jones, Leith and Rawlings 1977) and the evolution of Batesian mimicry in several lepidopterans (Turner 1977). Many paleontological case studies are also restricted to particular lineages, with studies on the horse (Simpson 1951; MacFadden 1992) and the mollusks of Lake Turkana (Williamson 1981) being among the best known. While such studies are usually transspecific, and therefore in the realm of ‘macroevolution’, they are only a very short distance in that direction from an origin-of-body-plans perspective. (Simpson (1944) used the term ‘mega-evolution’ for the biggest-scale evolutionary events such as body plan origins, but this term has not become widely adopted.)

So, this book is starting with an exhortation to the reader to believe that current evolutionary theory, based on natural selection and adaptation in present-day lineages is, at the very least, incomplete; and this exhortation is based on the drawing of a parallel between the processes of development and evolution. (Arthur 1997: 2-3)

(….) Regardless of timing of early [Cambrian] divergences, it appears that no phylum-level body plans have arisen in the animal kingdom in the last 500 my. This contrasts with the situation in plants, where teh angiosperm body plan arose relatively recently (probably about 130 my ago: see Hickey and Doyle 1977; Crane, Friis and Pederson 1995). Perhaps this difference relates to a difference in developmental-genetic control mechanisms in the two kingdoms, with some genes controlling the determination of animal body axes and other key processes of early ontogeny being more ‘generatively entrenched’ (Wimsatt 1986) than their nearest equivalents in plants. (Arthur 1997: 7)

(….) [O]ur current (neo-Darwinian) theory of evolution is incomplete…. In fact, neo-Darwinian theory is incomplete even when assessed against its own criteria. The essence of the neo-Darwinian view is that the evolutionary process is of a two-fold nature, involving the production of organismic novelties (of whatever sort) ultimately by mutation and the sieving of these by natural selection. (Arthur 1997: 9)

(….) The main problem with neo-Darwinism in its current form is that its theoretical structure is extremely lopsided. There has been sustained development of quantitative models of the action of selection, from the pioneering work of Fisher (1930), Haldane (1932) and Wright (1931) up to recent work such as that of Charlesworth (1994); while the mutational and developmental production of the variants being sieved by selection has continued to be treated by too many evolutionists as a ‘black box’, despite the numerous advances that have been made in developmental genetics in recent years. Essentially, the individual and population levels have been treated as quasi-independent. The fitness of mutant genotypes have been considered to be crucially important in models of selection, while the ways in which fitness effects are produced … have been largely disregarded. (Arthur 1997: 9-10)

This situation should of course be considered undesirable by all evolutionary biologists, including the strictest of neo-Darwinians, but how serious a problem the lack of a mutational/developmental component of evolutionary theory is perceived to be depends on the extent to which the ‘perceiver’ is a gradualist. If, despite the views put forward herein, all evolution proceeds through the accumulation of very minor variations — an extreme view popularized by Dawkins (1986) — then it may not be too much of a deficiency in the theory to simply assume that mutation perpetually generates morphologies that are slight variants on the existing form. But to anyone proposing the existence of one or more radical morphogenetic phases in evolution, the need for an adequate picture of the genetic architecture of development and of the ways in which this is altered by mutation becomes compelling. Hence the feelings of dissatisfaction that many evolutionary developmental biologists have with neo-Darwinism. There is nothing wrong with elaborate models of selection, but a detailed quantitative statement of how existing types are sorted and selectively eliminated (or held in a state of stable equilibrium) cannot pretend to be a complete theory. (Arthur 1997: 10)

Ironically, most of the alternative approaches to evolution that have proliferated in the last few decades have allowed the focus on destructive rather than creative forces to persist. The neutral theory of molecular evolution (Kimura 1983) — arguably within a broad neo-Darwinian world view — concentrates on the stochastic loss of neutral and nearly neutral alleles produced in an unspecified way by mutation. Punctuated equilibrium (Eldredge and Gould 1972) is a pattern, not a process, and may simply be a geological reflection of the standard neo-Darwinian mechanism of allopatric speciation, although some authors (e.g. Williamson 1981) have suggested otherwise…. (Arthur 1997: 10)

(….) The only approach [as of 1997, at the time of this writing] to evolution that has attempted to focus on creative forces has been that of Evolutionary Developmental Biology. I use this label (… Hall 1992) to cover the work of a heterogeneous group of biologists including, among others, von Baer (1828), Thompson (1917), de Beer (1930), Goldschmidt (1940), Waddington (1957), Gould (1977b [2002]), Raff and Kaufman (1983), Buss (1987), Arthur (1988), Thomson (1988) and Raff (1996). (Arthur 1997: 11)