Category Archives: Economics

Manslaughter by Fireworks

Two fires in unincorporated King County that killed or critically wounded residents following Fourth of July celebrations have been linked to fireworks, according to fire officials.

A fire near Seattle’s Highline neighborhood left one man dead the night of the Fourth and two homes engulfed in flames, according to a tweet from King County Fire District 20.

Roland Kennedy, 70, died from smoke inhalation, according to the King County Medical Examiner’s Office. His death was ruled an accident.

Fireworks to blame for deadly Highline house fire …, Seattle Times

On July 4th, 2018, I witnessed a neighbor shooting off powerful fireworks equal in concussion producing noise of modern battlefield artilleryrattling windows for a blockphysically threaten another homeowner pleading with him to cease and desist because his home had just caught fire due to fireworks landing on his roof. And if that was not enough, the neighbor who made the threat went over to the victim of fireworks house the next day and threatened him again for good measure. I think the words and deeds of those who cackle, laugh and ridicule even threaten reveals exactly who and what their motives really are all about.

True satire requires both wit and moral purpose. Without the first, it is mere condemnation; without the second, it is mere venting of the spleen. The employers of the former are the carpers and faultfinders who inhabit any university faculty, sucking laughter out of any fruit. They do not realize that taking something seriously does not mean taking it solemnly. The latter are the sophomores, those who take it all flippantly. They joke but have no purpose beyond cackling laughter.

Terry Lindvall, God Mocks: A History of Religious Satire from the Hebrew Prophets to Stephen Colbert
@Nextdoor Post sarcastically calling for ol’ fashioned 1950’s brawl in our neighborhood streets . . . threats meant to intimidate are already a reality.

Dave Baun’s caustic and belligerent fantasy is closer to reality than many realize. It is only a matter of time before neighbors start shooting neighbors as the incivility and abusive rhetoric displayed on Nextdoor continues to be tolerated and escalates. It is said that satire to be effective must have both wit and a moral purpose; Dave Baun’s malicious sarcasm has neither wit nor a moral purpose, but is merely an example the kind of flippant sophomoric cackling laughter that passes as civil discourse on Nextdoor.

Frank Iacolucci bullying on Nextdoor

Some Nextdoor bullies tell other homeowners who live in completely different HOAs that have passed rules to completely ban all fireworks to “move somewhere” else when illegal fireworks are shot off at all hours day and night outside the their homes. Frank is regular annual abuser and bully on Nextdoor around the issue of firing off illegal fireworks after Seattle Seahawks games. He likes to brag about shooting them off after Seahawks games mockingly posting after bragging, “kidding” when we know well he is not. And yet Nextdoor pretends this is somehow being “helpful” and civil to taunt, ridicule, and tell his neighbors to leave if they don’t like it. Frank even advocates for others (to join him one can assume) in firing off illegal fireworks after Seahawks games, thereby using Nextdoor as a platform to agitate for neighbors breaking the law and directly or indirectly harming their neighbors. Frank Iacolucci likes to bully his neighbors sitting behind his computer screen and Nextdoor enables his bullying:

Sorry I was cleaning up my firework mess! [illegally shot off after Seahawks game] I kid! I kid! [no Frank is not joking, only bullying and mocking and ridiculing] Have a wonderful night everyone! This thread was almost as entertaining as the Seahawks win. I guess you do know they won Shawna since the fireworks went off! Night. Hahahaha!!! My wife said someone would complain [about illegal fireworks shot off after Seahawks game] and I thought she was joking! Man I’m glad I’m not your neighbor! Go to bed! I can give Officer Shirley contact info. He’s the sheriff up here and I’ve know him for 20+ years. [information passed on to King County Sheriff’s department] He lives up here. Actually … maybe he was the one who lit the fireworks off! He is a huge Hawks fan…. [libeling an officer of the law?] Cops have more important things to worry about than people complaining in “unincorporated” king county [they are illegal there too but Frank doesn’t care] about fireworks going off after a Seahawks win! Do us all a favor and deal with it. (Nextdoor, November 2018)

I’ve been lighting fireworks in this neighborhood for 40 years so stop complaining [they have been illegal except for designated times for decades]. This is my neighborhood and people like you have made it comical! So move somewhere they are illegal [they are were she lives already and have been illegal for decades outside of very limited times, like around the Fourth of July, but this bullying belligerent doesn’t care] and stop complaining [making legitimate statements about illegal fireworks]. (Nextdoor, June 2020)

Sample of Frank Iacolucci’s hateful posting towards his neighbors on Nextdoor

It is not enough that each year several homes burn down, but for some on Nextdoor apparently it’s all just giggles and laughs even when our elderly neighbors, unable to escape, burn to death in house fires set by Fourth of July fireworks. They mock, ridicule, and laugh while their neighbors homes burn and some burn to death in Fourth of July fires. So much for Nextdoor’s Be Helpful, Not Hurtful policies. And we wonder where on earth our children learn to be bullies?

The cast of characters mocking like sophomores, those who take it all flippantly, who joke but have no purpose beyond cackling laughter parade a number of fallacious arguments — license masquerading as patriotism — insisting their fetish for fireworks is their Constitutional right in honor of our nations patriots. No such constitutional right exists and fireworks were historically regulated even in early America for public safety reasons. The fact that many cities have outlawed fireworks proves their is no Constitutional right to fireworks that override their neighbor’s right to public safety and to not have their homes burnt down or lives threatened by belligerents who insist they have a right to blow things up over and into their neighbors property. This vacuous and transparently self-serving pseudo-patriotism that is nonsense on stilts is typical of the rhetoric posted on Nextdoor.

Their claim that firing off dangerous fireworks is a “right” guaranteed by the Constitution is factually false (here). Neither does the Second Amendment guarantee the right to fire dangerous fireworks that threaten the lives and property of one’s neighbors. Repeatedly such self-serving narcissistic fallacious appeals to patriotism are used by such selfish individuals. Some even make the ludicrous claim that being a veteran entitles them to the right to blow up fireworks and potentially burn down their neighbors homes, or worse, kill them in a house fire. Enough is enough; it is time to call these people what they really are and expose the phony patriotism they use to hide their selfish narcissism and license masquerading as liberty and patriotism.

When the bullshit armchair-warrior blood and guts argument fails the Constitutional test there is always just plain old nativist ad hominem nonsense like blaming the ban on outsiders coming from sunny California or Seattle no less (here). Of course, many residents have lived in their homes for decades and how long someone has lived in unincorporated King County is irrelevant to the issue at hand. Another absurd excuse is the whataboutism (here). They feign being victims of those “others” who don’t abide by the rules, yet make no effort to hold those who don’t abide by the rules accountable, mocking and ridiculing the idea that offenders should even held accountable (here). Some openly accuse law enforcement of turning a blind eye or worse, actually participating in the illegal use of fireworks (here). What such sophistry is really aimed at is the other mockers to invite them to pile on and join in bullying meant to silence legitimate concerns about the safety of our neighborhoods, homes, and very lives being put at risk by the few who conflate license with liberty.

A few years back for a reason unrelated to July 4th fireworks I knocked on hundreds of doors on our HAO which has almost 1000 densely packed fir tree ringed homes. In the process I met many homeowners and among those many homeowners were more than a few who were elderly couples or singles who would find it very difficult to evacuate quickly should their house catch on fire. In more than one case I met elderly couples where one was caring for a spouse who having suffered a stroke or other debilitating illness would never be able to evacuate them in an emergency. And I was told by the firemen who came to house near our home to put out a fire caused by Fourth of July fireworks that they cannot respond to them all any longer, and that eventually one will cause multiple houses to go up in flames as nearby trees spread the conflagration faster than their resources can respond. We are known as the neighborhoods that burn. I wonder if those who minimize, excuse, ignore, and engage in mocking giggles and laughs and bullying on Nextdoor knock on their neighbors doors to find out if they have any elderly couples living nearby who might not be able to evacuate in a fire emergency? Or they just assume it never happens; out of sight out of mind and all giggles and laughs?

Our family has owned a home and lived in the Renton Fairwood area for over twenty years now. Over those twenty plus years we have observed the study increase in the volume and lethal power of dangerous fireworks[1] being shot off in our closely packed neighborhood. As the volume of fireworks being shot off in our neighborhood continued to substantially increased so too did the danger of deadly house fires increase over time, until on the Fourth of July 2018, while our daughter and future son-in-law were practicing their wedding dance in our backyard as we all enjoyed the evening dinner amidst a increasing volume of explosions we heard firetruck sirens come roaring into our block in response to a neighbor’s home set on fire by a firework that landed on his roof and set it ablaze. Luckily, it was caught in time and fire fighters were able to get there soon enough to put it out. But not everyone, as we see in the opening Seattle Times quote above, were so lucky.

Our Neighbor’s Home with shake roof set on fire on Fourth of July 2018
Nextdoor.com: Loss of property & life foreseen …

Later that same Fourth of July evening I observed a neighbor on my block putting on a rather big firework show of clearly illegal fireworks purchased from the tribal lands. When I directly asked him if these were legal fireworks or the illegal ones purchased from the tribal lands he rather coyly avoided the question. They were clearly not purchased from the local fireworks stand. Among this large display was a plate of mortars that shot into the air and rattled windows with huge explosions. I note that early that evening while speaking with one of the fireman who responded to our neighbors fire (above), remarked as the explosions were going off around us, “[boom!] That’s a felony, [boom!] that’s a felony!” and told me to contact Governor Jay Inslee and ask him why the ban on illegal fireworks is not being enforced?

Nextdoor.com: Illegal fireworks

I note that earlier I had attempted to get some clarification on which fireworks were legal and which were illegal, but found the existing laws vague despite the clear prohibition of fireworks purchased on the tribal lands. The problem is that some fireworks (the so-called legal ones) are being sold in local firework stands that rent space in our local Safeway parking lots. And indeed, these stands sold mortars which are difficult to differentiate from the ones purchased on the tribal land vs. local fireworks stands. Even though there are statements from the various King County sites claiming that “If it has a stick or fins and goes up, or if it blows up, it is illegal in Washington State,” the laws as currently written make it virtually impossible for King County Sheriffs to effectively enforce the law. It is simply asking to much of our Sheriffs to turn them into explosive forensic investigators when firemen, trained as they are, have already noted in many cases the firework that caused the fire or damage or injury is never recovered having been destroyed in the explosion/fire.

To make matters worse, that same evening I witnessed the distraught homeowner whose home had been set on fire by fireworks drive by the neighbor’s illegal firework show and ask him to stop. This neighbor, rather than seeing the gravity of the situation and having any empathy, chose instead to attempt to minimize and intimidate the distraught homeowner telling him to “Move on, mind his own business” etc., finally threatening him saying, “I can find out where you live.” As I stood there and watched this, the demeanor and manner in which this statement was delivered, it was obviously delivered as a threat. I was told by the homeowner whose house caught fire that the next day this belligerent individual walked over to his block and told him, “You just made an enemy.” This kind of attitude raises serious concerns about the safety of our neighborhood when some are willing to ignore the existing laws and then resort to threats and intimidation when confronted with the consequences of illegal fireworks being shot off in our neighborhoods.[2]

That same Fourth of July evening as I walked throughout our neighborhood to observe the celebrations and what kind of fireworks were being shot off. I observed just a few houses away in a rental home the renters shooting off mortars and bottle rockets into the air amidst homes right across the street with shake roofs (know to be highly flammable). I was told by one fireman that bottle rockets are notorious for causing house fires as they often land on roofs still burning and ignite leaves and other debris. Spent mortar tubs and bottle rockets were clearly visible all throughout the neighborhood.

In one case I observed what appeared to be an adult and their children holding Roman Candle fireworks in their hands shooting them up into the air aiming down the street. It does not take much of an imagination to foresee the danger in such irresponsible behavior. Roman candles caused roughly 400 injuries in 2018. Just around the corner from where I observed this lives a family of five with three small children and a house with a shake roof. I dread thinking what might happen to them in terms of loss of property and potentially even life if some stray Roman candle flame should land on their roof and set their home ablaze.

As I continued to walk through the neighborhood I came across a home with a number of children shooting off bottle rockets with absolutely no adult supervision not a single adult in sight and right across the street were several homes with highly flammable shake roofs over the top of which they were shooting these flaming bottle rockets. The day after the Fourth of July I walked over and filmed the remains of the fireworks these kids and been shooting off:

The death of Roland Kennedy due to the use of Fourth of July fireworks being shot off in our closely packed neighborhoods that have many older homes with shake roofs was not unforeseeable. Over the previous years many discussion threads have arisen on social media site Nextdoor regarding the danger of the use of fireworks in our neighborhoods. I searched the Nextdoor going back several years and observed a pattern of communication taking place. Whenever a poster would raise a legitimate concern regarding the firing of fireworks which happens not just on the Fourth of July but frequently in association with Seahawks’ football games a predictable cast of characters would post condescending and/or ridiculing responses arguing they have every right to shoot off any kind of fireworks they like while ignoring the fact that not all fireworks were legal, often telling concerned homeowners to just drug their pets, ignore the fireworks, hose down your roof, etc.[3]

Some would even boast that they would be putting on “big” firework shows, always excusing their behavior and shifting blame onto the anonymous “other” guy who wasn’t practicing safe fireworks protocol or using “legal” fireworks for the increasing house fires occurring on the Fourth of July. They may well be taking all the recommended precautions and only using legal fireworks (i.e., no bottle rockets, etc.) but this ignores the reality that people’s homes are burning down and lives have been and will continue to be lost because of many who don’t abide by safe practices. The simple fact as told me by numerous firemen is that even legal fireworks cause house fires and our own experience in our densely packed neighborhoods tell us the many are not the few. Some even went so far as to film the fireworks being shot off in our neighborhoods and then congratulating themselves about another great year of neighborhood firework shows:

The interesting thing about the video above is that I was able to use public King County Parcel data and geographic information systems mapping (GIS) and google maps to overlay King County Parcel Maps onto the video and identify the actual parcel data of the homeowner firing off the fireworks.

Click to enlarge image

The video was clear enough to trace the firework tracer right back to the ground and observe the homeowner get off his/her porch, walk out into the cul-de-sac and setup the next mortar and fire it off. For example, at 0:18 you can trace the location of a firework being fired from the ground up into the air-burst that follows. At 1:21 and 2:24 you are looking at the following Woodside HOA area (image right). If one observes the video carefully it is not difficult to see where fireworks are being fired from. I note that Woodside’s HOA has already banned fireworks in its neighborhoods.

If one looks carefully at the King County Parcel maps below the image of Woodside, which matches the video one can identify the exact parcel in front of which fireworks are being fired. If one combines the fact that a simple inexpensive drone can capture the digital forensics evidence good enough to watch an individual leave their front yard and setup and fire a firework and follow each shot firework’s tracer back to the location from where it was fired it becomes quickly clear that there already exists technologies that would allow law enforcement a cost-effective way to identify offenders and deal with them appropriately in real-time.

King County Parcel Map of Woodside Neighborhood

It is time those who want to see this abuse of illegal fireworks reigned in and stopped to do something about it by organizing a letter/email campaign in support of Jim McDermott’s proposed legislation to ban all fireworks in Unincorporated King County.

Dear Friend,

You are receiving this message because you have previously contacted my office regarding the dangers of fireworks.

Today at the Council, I introduced legislation that would ban the sale and discharge of consumer fireworks in unincorporated King County. The tragic death of an elderly man in White Center in house fire caused by fireworks, as well as the increasing risk of wildfire due to climate change, demonstrates the danger posed by fireworks, and the need to act.

As the proposal moves through the legislative process, I would encourage to you share your thoughts with my Council colleagues in support of the proposal. This can be done via email or in-person at a public hearing, once the ordinance is scheduled to be heard in the Council’s Local Services committee.

Please see the press release below for more details or click here.

Thank you for your support.

Joe McDermott, King County Concilmember, District 8 (Joe.McDermott at kingcounty.gov)

Take action now. Find out who your King County Executive is and email them and tell them you support the proposed firework ban in unincorporated King County.[4]

~ ~ ~

[1] The majority of the most dangerous fireworks are already illegal. They are purchased on the surrounding tribal lands by our neighbors and then brought into our neighborhood and and fired off as part of their Fourth of July celebrations. But the existing laws are difficult to enforce due to vague definitions of what is legal and illegal and inability of law enforcement to determine the difference between legal and illegal fireworks with the degree of evidence required to make the law enforceable. By banning and making ALL fireworks illegal there will no longer be an difficulty in determining who in our neighborhood is firing off illegal fireworks. Such a total ban on all fireworks is the only way to make our neighborhoods safer for ourselves and our pets.

Like clockwork every Fourth of July the same actors mock and ridicule anyone who raises concerns on Nextdoor about fireworks terrorizing themselves or their animals or posing a risk to their lives, property, and peace of mind. They write the names of those who raise concerns on the mortar boxes and then post them on Nextdoor mocking legitimate concerns. Instead a belligerent attitude is exhibited that refuses to consider that there are legitimate concerns, such as the fact people have died in fires cause by fireworks, houses have burned down our caught fire, firework abusers have threatened their neighbors and brag about shooting them off even at times when it is clearly illegal as the comments of Frank Iacolucci and Alicia Thorsteinson evidence below.

Regular Belligerents on Nextdoor

The only way is to make ALL fireworks illegal thereby creating a clear line so those who abuse this confusion over what is legal and illegal are no longer able to do so thereby threatening the lives, property, and right to live peacefully without being terrified by being subjected to noise levels equal to being on a battled field under mortar fire. People die, houses catch fire and even burn down. There is no way to stop this except by making all fireworks illegal and only allowing properly permitted public displays. Otherwise our neighborhoods are increasingly going to be subjected to this threat from the few who abuse fireworks because of the confusion between what is legal and illegal.

[2] I shared what I witnessed (the statement I interpreted as a threat) with two police officers that are neighbors and both characterized the statements as threats and suggested a report to log the incident be made.

[3] This kind of bullying, intimidating, ridiculing, or even threatening behavior indicates a certain attitude that I observed repeatedly on the social media site Nextdoor whenever anyone would raise legitimate concerns about the danger of shooting off fireworks (legal and illegal) in our neighborhoods.

[4] Determine which district you are in here and who your representative is and join in supporting the proposed firework ban in unincorporated King County by communicating your support that the proposed ban of fireworks above be passed.

[5] On April 27th 2021 King County Council passed a resolution banning all fireworks in unincorporated King County (See packet).

Chimeras and Holy Grails

Because the great controversies of the past often reach into modern science, many current arguments cannot be fully understood unless one understands their history.

ERNST MAYR 1982, 1, in McCloskey, Deirdre Nansen; Ziliak, Steve. The Cult of Statistical Significance (Economics, Cognition, And Society)

Too large a proportion of recent ‘mathematical’ economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze or pretentious and unhelpful symbols.

John Maynard Keynes

One of its central tenets is that the “real” nature of the social world imposes restrictions on individuals’ knowledge. (Marqués 2016, 2)

(….) If theoretical practice in economics is going to have authentic epistemic relevance, it is necessary to shift the attention from standard models developed within the current bookish tradition to the solution of those concrete problems which result from open ended, intervenible and conflictive economic processes, dominated by radical uncertainty. (Marqués 2016, 3)

A processes oriented economics would have to provide a different kind of theoretical practice adequate for examining sequences of feasible economic events (i.e., the main developments that those processes could plausibly adopt). This kind of practice offers points of intervention to those skills, qualifications, common sense and political abilities that are needed to manage these processes. (Marqués 2016, 3)

Science and economics

Let me advance a brief comment about the relation between science and economics. This book does not take an irrational or anti-scientific stance. On the contrary, in the domain of natural phenomena modern science has shown extraordinary successful results. But the same cannot be said when social processes are at stake, and I have tried to offer some of the reasons (ultimately, ontological) for this failure. So, I do not share the idea of those authors who think that economics can be scientific (as much as natural sciences), and that such an economic theory, once found, would solve those economic problems that the best theoretical tradition assigned to economics a long time ago (growth, employment and development with fairness and equality). (Marqués 2016, 5)

Particularly, I think that the dream of having a successful theory of expectation formation is largely a chimera, and indeed I dismiss the necessity of having such a theory. Neither governmental authorities nor any other economic actor may count on being able in a sure (scientific) way to intervene and make people entertain “correct” expectations. But as we try to show in this book economic actors (including the state) do not need a scientific theory able to guarantee their goals in order to intervene systematically upon the economy. Instead they can apply feasible sequences as well as direct (practical) knowledge and skills to cope with the situation and push the process in the desired direction. (Marqués 2016, 5)

It is also important to examine the relation between science and economics from another perspective. Theoretical physics has been successfully applied to a wide range of circumstances of our world. This could be done thanks to the development of associated technologies (different kinds of engineering founded on physical theory). Some may think that nowadays economics is at a pre-technological stage (like physics was sometime ago), and that what is needed is more time (and more knowledge, mainly mathematical knowledge) to develop a sort of economic engineering. Popper was confident in the benefits of fragmentary social engineering. The call to elaborate an alternative economics oriented to solve practical problems of our world could be interpreted this way. (Marqués 2016, 6)

Our analysis of deliberate mechanisms like Prospect Theory and Decision Making Models gives testimony of the kind of practical results that can be obtained by this road. But I suspect that in reference to more traditional economic problems like those mentioned at the beginning of this section, a similar expectation is unfounded and doomed to failure. As far as economic phenomena result from open ended processes as we have described them there is no possibility of shaping and controlling them by means of social engineering similar to what happens in the case of natural sciences. The specific domains where neither uncertainty nor conflicts between lobbyists that defend different and opposite interests exist. These technologies are designed for “leading” in a scientific way the economic processes. And I suspect that it is not possible to hope that we may count on similar tools in the near future. (Marqués 2016, 6)

Gustavo Marqués (2016) A Philosophical Framework for Rethinking Theoretical Economics and Philosophy of Economics

This book is set against the assumption that humans’ unique feature is their infinite creativity, their ability to reflect on their deeds and to control their actions. These skills give rise to genuine uncertainty in society and hence in the economy. Here, the author sets out that uncertainty must take centre stage in all analyses of human decision making and therefore in economics. (2019, i)

Economic cycles and economic crises belong to the defining moments in economic history because they affect our sense of economic security and level of welfare at large. They also serve, at least implicitly, as tests of our understanding of the economy as well as our ability to draw the right policy conclusions from our economic theories. No wonder, therefore, that economists have long sought to understand severe economic fluctuations with the ultimate goal of steering the economy clear of their troubled waters. (Müller-Kademann 2019, 1)

To that aim, economists, not least due to John Stuart Mill’s ingenious work, have long ago boarded a particular ontological train with the ambitious goal of keeping up with the natural scientists’ positive-deductive race to uncovering the truth about the world around us. If we only had sufficient knowledge of the machinery we would know how to stop crises from recurring, or so the logic goes. Alas, the financial crisis that started to unfold in 2007 once again reminded us that economists are still a long way from safeguarding the economy from severe difficulties. (Müller-Kademann 2019, 1)

[G]enuine randomness also exists. This genuine randomness occurs at the micro scale, for example, when matter seemingly assumes two states at the same time. According to the Heisenberg uncertainty principle, matter’s actual state can only be pinned down by actual observation, with the striking implication that mere observation affects the state of the matter. What might seem very odd and irrelevant for daily life is actually relevant when it comes to secure data transmission or calculating the costs of nuclear waste disposal because random decay determines the time the waste has to be stored in safe (and hence expensive) conditions. (Müller-Kademann 2019, 7, emphasis added)

Christian Müller-Kademann (2019) Uncertainty and Economics. Routledge. Emphasis added.

You may imagine that your mind — your stream of conscious thoughts, ideals, and feelings — influences your actions. You may believe that what you think affects what you do. You could be right. However, the scientific ideas that prevailed from the time of Isaac Newton to the beginning of the twentieth century proclaimed your physical actions to be completely determined by processes that are describable in physical terms alone. Any notion that your conscious choices make a difference in how you behave was branded an illusion: you were asserted to be causally equivalent to a mindless automaton. (Stapp 2009: vii)

We now know that that earlier form of science is fundamentally incorrect. During the first part of the twentieth century, that classically-based conception of nature was replaced by a new theory that reproduces all of the successful predictions of its predecessor, while providing also valid predictions about a host of phenomena that are strictly incompatible with the precepts of eighteenth and nineteenth century physics. No prediction of the new theory has been shown to be false. (Stapp 2009: vii)

The new theory departs from the old in many important ways, but none is more significant in the realm of human affairs than the role it assigns to your conscious choices. These choices are not fixed by the laws of the new physics, yet these choices are asserted by those laws to have important causal effects in the physical world. Thus contemporary physical theory annuls the claim of mechanical determinism. In a profound reversal of the classical physical principles, its laws make your conscious choices causally effective in the physical world, while failing to determine, even statistically, what those choices will be. (Stapp 2009: vii)

More than three quarters of a century have passed since the overturning of the classical laws, yet the notion of mechanical determinism still dominates the general intellectual milieu. The inertia of that superceded physical theory continues to affect your life in important ways. It still drives the decisions of governments, schools, courts, and medical institutions, and even your own choices, to the extent that you are influenced by what you are told by pundits who expound as scientific truth a mechanical idea of the universe that contravenes the precepts of contemporary physics. (Stapp 2009: viii)

The aim of this book is to explain to educated lay readers these twentieth century developments in science, and to touch upon the social consequences of the misrepresentations of contemporary scientific knowledge that continue to hold sway, particularly in the minds of our highly educated and influential thinkers. (Stapp 2009: vii)

Henry P. Stapp (2007) Mindful Universe: Quantum Mechanics and the Participating Observer. Springer.

~ ~ ~

DETERMINISM AND FREE WILL IN ECONOMICS

Most people do not really want freedom, because freedom invovles responsibility, and most people are frightened of responsibility.

— Sigmund Freud

Most of the really fundamental debates in economics today are very old debates indeed. But economists—and not just the economists of the post-war period—have been scrupulous in avoiding many of them. Other social sciences do not suffer the same defect, and one wonders why this might be the case in economics. The key philosophical difference between the view of economics put forward by the marginalists and the one championed in this book is that the former believe that all human action is pre-determined while the author of the present book believes in a large amount of freedom in human affair. (Pilkington 2016, 341)

(….) Economists today instinctively sign on to a sort of vulgar Newtonian view of the world. That is, they instinctively think in terms of a space in which a variety of forces play themselves out—often, in the case of the marginalists, at a given instant in time. But this sort of philosophy was long dead in the humanities at the time Keynes was writing. Rather, the philosophies of Moore and Keynes start from the seat of consciousness. We do not start from the vulgar assumption that reality ‘is’ in some sense a space with deterministic forces playing themselves out. This schema, thought construction or model is fully recognized in Keynes to be something cooked up by consciousness. (Pilkington 2016, 345)

This, I think, accounts for why many economists find Keynes’ writings so obscure. It also accounts for why those with training in philosophy or psychology will find them far more accessible than those with training in mainstream economics, physics or engineering. Keynes’ works are written from the point-of-view of the reasoning subject. This is the natural starting point for Keynes. Consciousness comes first; models and metaphors are adopted later. This is why in Keynes’ work we are from time to time put in the shoes of the investor trying to make decisions about the future. In mainstream economics, agents making investment and consumption decisions are reduced to little objects that reason in a pre-determined manner. In Keynes, by contrast, economic agents making investment and consumption decisions are full subjects endowed with a consciousness that is identically structured to the one that we ourselves possess. Thus in order to understand the choices made by these agents, we do not simply reduce them to little puppets that behave how we assume them to behave but rather we must try to get ‘inside their heads’. (Pilkington 2016, 345)

ECONOMIC MODELING: A PSYCHOLOGISTIC EXPLAINATION

Can anything be imagined so ridiculous, that this miserable and wretched creature, who is not so much as master of himself, but subject to the injuries of all things, should call himself master and emperor of the world, of which he has not power to know the least part, much less to command the whole?

— Michel de Montaigne

Throughout this book, we have been rather harsh on economists. We have accused them of engaging in all sorts of silly behaviour, of constructing irrelevant theories and of being a key force darkening the doorway of knowledge and spreading ideology. But so far we have not really sought out motivation. Are we to assume that most economists working today are nefarious crooks and scoundrels? I should think not. Most economists working today are well-meaning people who genuinely want to make the world a better place. They are men and women who truly believe that they are constructing useful knowledge that will help humanity progress as a species in the future. That they typically make the world a worse place and cloud the judgments of people is not altogether their fault. (Pilkington 2016, 353)

What is it then that drives these people to Bedlam and back? This is something that the present writer has thought about quite a lot. I have come to this conclusion: these men and women are chasing after a Holy Grail, one that has been sought since time immemorial. At first it was sought in the sphere of religion, but after this it was sought in the field of philosophy and, finally, science. Today the sphere in which this Holy Grail is most aggressively sought is in the field of economics. What then characterises this Holy Grail? Well, it is the Holy Grail of perfect knowledge. It is the drive that exists in many intellectually minded men and women to find a sort of perfection, a total and pristine knowledge that would make them, in a very real sense, omnipotent or, at least, omniscient. This Holy Grail was first formulated in the modern age by the French mathematician and astronomer Pierre-Simon Laplace: (Pilkington 2016, 353-354)

We ought then to regard the present state of the universe as the effect of its anterior state and the cause of the one which is to follow. Given for one instant an intelligence which could comprehend all the forces by which nature is animated and the respective situation of the beings who compose it — an intelligence sufficiently vast to submit this data to analysis — it would embrace in the same formula the movements of the greatest bodies of the universe and those of the lightest atom; for it, nothing would be uncertain and the future, as the past, would be present in its eyes. (Laplace 1902, p. 4)

For some rather odd reason, this thought experiment has become known as ‘Laplace’s Demon’ today. In fact, readers of older philosophers will recognise that this is identical to how many philosophers conceived of an image of God. For many writers, God is an omniscient being that has total knowledge of all causes and effects and has a sort of ‘single formula’ in His immediate consciousness that explains everything across time and space. He is, in this conception, outside of time and space and thus merely observes everything happening at once in the form of this timeless, perfect formula. (Pilkington 2016, 354)

When economists try to build totalizing models, they are doing something similar. They are trying to figure out all the mechanisms — the causes and effects — that pertain in the economy at all times, and then they are trying to reduce these to a single model. If they could ever find their Holy Grail, they would then, in the words of Laplace, have ‘the future, as the past, present in their eyes’. They are reaching for perfection. In a strange psychological sense, they are seeking to become like the old conceptions of God that many philosophers and theologians held. Again, they are not the only ones that do this. Many physicists reach for the same Holy Grail and try to generate ‘theories of everything’. But it is in economics, which is not only a far more inexact discipline but also a far more ambitious one, that this fantasy has done the most damage. (Pilkington 2016, 354)

The psychological roots of this tendency are inherently narcissistic. By that, I do not mean that economists are all pathologically narcissistic. No, psychologists have long recognised that all of us have narcissistic tendencies buried within our minds. Somewhere buried within our minds, we all have an image of perfection that haunts us…. On occasion, such a narcissistic image can become an obsession and do serious psychological and physical damage to a person [and society]…. There is no such thing as true perfection just as there is no such thing as a unified theory of how the economy works that will be valid across time and space. These are fantasies and illusions that, if we do not understand them to be illusions, can lead us down wayward paths. (Pilkington 2016, 354-355)

We have argued throughout the book that economics today is predominantly ideology. But just as certain forms of religious discourses were the key ideologies of the past, economics too activates these deep psychological structures within its practitioners to ensure that they remain stuck on the treadmill, chasing ghosts rather than engaging with the real world. Certain religious discourses offered its adherents a sort of union with God if they studied sacred texts hard enough. This kept these conduits of ideology away from the real world and ensured that they engaged in largely useless activity in their fruitless search for omniscience by connecting with God. Economics today does something similar in that it encourages its adherents to build models that are supposed to be true across time and space. The adherents are then encouraged to test these models against data using highly problematic econometric techniques, after which the whole discipline starts to ruminate if they stop yielding accurate results. (Pilkington 2016, 355)

The result is a stagnant discipline. Every few years, economic theory will go into crisis as some real world event calls into question the predominant models. Economists will then go back and reconstruct the doctrines in light of recent events only to have them fall apart once more when something changes in the economic world. It is a bit like watching an unfortunate though well-meaning man build and rebuild his house along an earthquake fault line always insisting that this time the house will survive. Or a cult devotee that continuously says that the end of the world is coming on a given date only to push this date back every time the end of the world does not arrive. (Pilkington 2016, 355-356)

It is in the tendency to model itself — which has deep psychological roots — that leads economics down this dead end and makes it a sort of clown science. If economists would just drop the silly image of timeless truths and recognise that in economics we deal with contingent historical events, we would all be better off. But his cannot happen unless the economics profession as a whole reorients its narcissistic image away from trying to search out Holy Grails and towards trying to manage as best they can in a highly complex and changing world. If this were ever achieved the manner in which argument and debate take place within the discipline would completely and utterly change. This would be wonderful but it would also mean that economics would have to stop being an ideology. This would, in turn, mean that economists would have to stop projecting the image that they hold crystal balls and can see the future. That might not only be a blow to their egos but it might, in a strong sense, also diminish the standing that they hold as ideologues in the political and social arena. Whether economics can ever exist as a non-ideology is an open question. Personally, I believe that it can. But, given I do not pretend to have a crystal ball, only posterity can pass absolute judgement on the matter. (Pilkington 2016, 356)

Telos and Economics

In the organic complex of habits and thought which make up the substance of an individual’s conscious life, the economic interest does not lie isolated and distinct from all other interests.
— Thorstein Veblen

Economics is essentially a moral “science,” and not a natural science. That is to say, it employs introspection and judgment of value.  
— John Maynard Keynes, letter to Roy Harrod in 1938

Consciousness cannot be computable.
— Roger Penrose

It is the “end” that lends “means” its importance, not vice versa … There cannot be any doubt that there is a causal relationship between the importance of the end, and that of the means.
— Eugen Von Böhm-Bawerk

As a matter selective necessity, man is an agent. He is, in his own apprehension, a centre of unfolding, impulsive activity — “teleological” activity. He is an agent seeking in every act the accomplishment of some concrete, objective, impersonal end….
— Thorstein Veblen, The Theory of the Leisure Class, Chapter I

[Humans are seeking subjective and personal ends; Veblen followed the spirit of the age in not recognizing this and his adoption of classical Darwinian bias to impersonal mechanism and depersonalization of social explanations. Social science was to be modeled after physics and impersonal mechanistic classical Darwinian ideas which were also seeking to model themselves after physics.]

Telelogical explanations of action have been largely extruded from the natural sciences, even if we take account of the doctrine of “vitalism” which proved to be the most stubborn and chameleon-like of adversaries. After all, it is no longer a subject of credible speculation to attribute goal-seeking or purpose to bodies (individual or collective) that are considered to lack consciousness. (Roth 2008, 5)

However, such explanations of behavior and their resultant consequences are of crucial relevance in the behavioral sciences and in the forming of judgments in the daily business of life—where the values, preferences, motivational beliefs, and purposes of people and their institutions are of vital operational interest. To circumvent them—or to seek to “rise above” [or below] them (via exalted supra-deterministic forces) … or what is equivalent in practice, to treat them as just “being there” in the form of “given” items on a “menu” of commodities or “unexplained factor endowments” without ontogeny—is to create a self-neutering cordon sanitaire between the entire subject and the real world which is dependent on its historical trajectory. (Roth 2008, 5)

(….) In Norbert Wiener’s “God and Golem” 1964, the following trenchant comment appeared which sums up the mindset of the neoclassical straight-jacket.

“The success of mathematical physics led the social scientists to be jealous of its power without quite understanding the intellectual attitudes that had contributed to the power.” As Wiener explains further: “The mathematical physics of 1850” (this early date may be especially unkind cut on his part) became “the mode of the social sciences.” Wiener goes on to say that “very few econometricians are aware that, if they are to imitate the procedure of modern physics, and not its mere appearances (perhaps the unkindest cut of all), a mathematical economics must begin with a critical account (i.e., rigorous definitions?) of these quantitative notions and the means adopted for collecting and measuring them.” Since Wiener spent many years on the same premises as the most prominent “imitators” he must have been keenly aware of just how the problem of defining key economic variables to a point where they could be meaningfully manipulated as homogeneous “technical” units had, in effect, defeated their best efforts to attain the “scientific” respectability that only “quantifiability” can bestow. With this perhaps definitive limiting principle on the subject as a subliminal guideline we can, in a humbler vein, pose the following question: Is there at least some procedure that accepts implicitly the subject’s inherent limitations or, more to the point, its own unique nature by actually searching for the boundaries within which some degree of “quantifiability” is feasible, and beyond which this aspiration is merely spurious or being deliberately or unwittingly abused? This is the same as asking how far we can go with many of the traditional operations of economic estimation, calculation, and comparative valuation … or at what point do they cease to convey ordinal meaning? (Roth 2008, 80-81)

(….) There cannot be any “iron laws” that determine the “path” of economic history. Such “prophecy” is more in the nature of proclamation, disguised as “Science” that was so typical of 19th Century crack-pot determinists, from Gobineau to Marx to Houston Stuart Chamberlain and their disciples in the twentieth century. Their “predictive power” was closer to Nostradamus than to Darwin. Their powers of explanation were closer to those who can explain “the price of everything and the value of nothing.” Economic behavior is contingent and value-loaded and has a gestalt relationship to the consequences of its own interactions. Therefore no strictly “determined” rest point or steady-state, whatever we choose to call it, can be the result of a process which originates in human behavior at the individual level, or that of their institutions which are governed by “rules” crafted by groups of individuals. (….) The evolution of markets is the active (institutional) expression of human teleologies. (Roth 2008, 119-120)

Norman L. Roth (2008) Telos and Technos: The Teleology of Economic Activity and the Origins of Markets

Even such purely academic theories as interpretations of human nature have profound practical consequences if disseminated widely enough. If we impress upon people that science has discovered that human beings are motivated only by the desire for material advantage, they will tend to live up to this expectation, and we shall have undermined their readiness to moved by impersonal ideals. By propagating the opposite view we might succeed in producing a larger number of idealists, but also help cynical exploiters to find easy victims. This specific issue, incidentally, is of immense actual importance, because it seems that the moral disorientation and fanatic nihilism which afflict modern youth have been stimulated by the popular brands of sociology and psychology [and economics] with their bias for overlooking the more inspiring achievements and focusing on the dismal average or even the subnormal. When, fraudulently basking in the glory of the exact sciences, the psychologists [, theoretical economists, etc.,] refuse to study anything but the most mechanical forms of behavior  often so mechanical that even rats have no chance to show their higher faculties  and then present their mostly trivial findings as the true picture of the human mind, they prompt people to regard themselves and others as automata, devoid of responsibility or worth, which can hardly remain without effect upon the tenor of social life.

Andreski 1973, 33-34, in Social Sciences as Sorcery

Stories about Taoism taken out of historical context*, speculations about abiogenesis unrooted in fact** (Geoff 2019); parables about Umwelt (an organism’s ‘world-view’) reduced to a “social insect” with a ganglion for a brain as human proxies devoid of personality and real human behavior (Shiozawa 2019); facile ex cathedra assertions that human minds capable of contemplating “means” and “ends” and  looking before leaping, let alone reflecting on moral and ethical choices — values — are really nothing more than mere Turing Machines and therefore mathematically modellable with genetic computational algorithms (Shiozawa 2019); claims the entire world economy can be modeled after a fitness climbing tick aka “social insects” because human beings behave like them 99% of the time  (Shiozawa 2019) have little to do with understanding “basic economic ideas or of the history of economic thought.” (Norman L. Roth on RWER) Shiozawa claims he has now provided the micro-foundations of an entire world’s macro-economics in his “if-then” algorithmic computations by simply reducing all human behavior to the level of a tick. Evolution is the New Central Dogma of economics according to his theory.

What some of these stories have in common is the desire to impose upon human economic behavior a simplifying story meant to enable mathematical tractability so encompassing it can be called a world-view.  Mirowski’s history of economics “More Heat than Light” eloquently tells the history of the “eternal folly of imitating other more ‘truth-seeking’ {usually physical} sciences, by simply imposing them on economics” and the “farcical ‘physics envy’ & slavish imitation of mid-19th century thermodynamics … [n]ot to mention mathematically trained Irving Fisher’s slavish mimicry of Boyle’s Law of gases, to derive his ‘Quantity theory of Money’.” (Norman L. Roth on RWER)

There are far more proximate causes than the big bang we can study to gain a fuller picture of economics, many of which are amenable to reasonable mathematical modeling within sensible limits. We can learn a lot from behavioral economics and its use of experiments within certain limits; human beings are after all to one degree or another habitual creatures. We can even learn something from our evolving understanding of evolutionary theory if we are careful to distinguish the difference between claims of mechanism vs. metaphor. We learn, for example, that many human behavioral traits are shared with animals; cooperation is as much a part of evolution and life as competition and that too much of the later can be actually self-destructive. But there are also important differences that can not be overlooked or ignored or explained away with scientism’s hand-waving and just-so stories.

* Historical context counts; Taoism (along with Confucianism) was a religion and moral philosophy (metaphysical theory of the universe) that was more about maintaining harmony between heaven and earth, which translated into social context meant harmony between the ruling upper class and the ruled lower-classes aimed at maintaining social harmony and civil and political stability. The real interesting aspect of Taoism was its moral precepts that were meant to guide social and economic behavior so-as to maintain social harmony. The ethical precepts have more relevance to economics than some recent Western reinterpretation of what it means to modern science. The idea that the ruler’s behavior must accord to a moral code of conduct embodied in the Way provided a basis upon which the mandate of heaven could be either considered in operation (i.e., they ruled fairly, justly, and upheld moral standards)  or not in operation (i.e., they ruled unjustly, unethically, and for selfish gain and not for the benevolence of the people). These considerations were the ancient Chinese method of determining if the ruler needed to be removed or remain in place; at least that was the theory.

Chemical self organisation, life

Self-organisation has been observed in chemical systems as well (Prigogine, 1980), and exploration of this has revealed an intriguing path that may lead to life (Kauffman, 1993).

(….) One of the great puzzles about life is that a living cell is an assembly of very special molecules in very particular relationships. Given that much of the universe seems to degenerate into randomness, it seems impossibly unlikely that the components necessary for rudimentary life would ever come together. Catalytic cycles provide a mechanism for generating a particular small group of chemicals, rather than a random soup.

(….) Living organisms are made of carbon molecules of many different kinds. We have known for a long time that carbon was capable of very complicated chemistry and that this must have something to do with the existence of life. Only in the past few decades, however, has growing knowledge of catalytic cycles led to the realisation that they might lead to an accumulation of ever-more complicated carbon chemistry that might ultimately become a living cell. This would involve not just one level of self-organisation and emergence, but probably many levels, each level giving rise to new kinds of emergent behaviour. It is thus possible to conceive how something with the vast complexity of a living cell might have originated from inanimate materials through many levels of self organisation (Kauffman, 1993).

In any case, regardless of how life began, the modern understanding of biochemistry makes it clear that living organisms are vastly sophisticated examples of complex self-organising systems.

Geoff Davies (2019, 118-121) Society, Nature: An introduction to the new systems-based, life-friendly economics

** Interestingly enough abiogenesis is not part of Neo-Darwinian evolutionary theory and it is careless history and misleading story-telling to imply it is. If such speculation could become fact then it would finally be possible to reduce biology to physics, but at this point in time the only way we know how to successfully accomplish that is murder. One doesn’t need to tell highly speculative and misleading stories about abiogenesis to recognize the complexity and emergent nature of human individual and social interactions. Abiogenesis is no more relevant in understanding economics than is the big bang. The real irony is that the lessons from quantum physicsi.e., fundamental physics cannot exclude ‘the observer’are more applicable to economics than either the big bang or abiogenesis. Such speculation is more akin to Shiozawa’s effort to reduce human economics to econophysics by reducing complex human mind and behavior to the level of brainless “social insect” and then modeling bio-mechanical stimulus-response behavior with genetic algorithms. Shiozawa correctly calls out the mainstream economic assumption of a Homo economicus with unlimited information and “farsightedness in time” as “conspicuous,” but it is as equally conspicuous to assume humans know nothing more than than a brainless insect. Unfortunately for Shiozawa human beings transcend mere stimulus-response behavior far more than 1% of the time. Slow and fast are not the full story of human thinking. The invention of financial instruments of mass destruction transcend the thinking capacity of ants and ticks, even dogs, no matter how “social” some think they are. The fatal flaw of Yoshinori Shiozawa’s new Central Dogma—Microfoundations of Evolutionary Economics—is succinctly stated in Stanislav Andreski’s quote above.

Since this historical [Miller-Urey] experiment, the field has veritably exploded. In the last three decades, the origin of life has been the subject of dozens of books, scores of essays, thousands of articles, relating an enormous amount of experimental and theoretical work. Periodicals devoted exclusively to the subject have been founded. Textbooks dedicate whole chapters to it. The reason for this upsurge of interest is simple. As I have attempted to show …, we have come to know enough about life to draw the basic blueprint according to which all extant living organisms are constructed. Scientists faced with the blueprint (or, rather, with their own version of the blueprint, because they tend to see life through different glasses, depending on their fields of specialization) find the problem of how the plan materialized almost inescapable. This turned out to be my case as well. (de Duve 1991: 110)

But I must add a warning. If not considered totally outlandish any more, the field still remains largely confined to speculation. When it comes to events that happened several billion years ago, hard data are scarce and, perforce, are supplemented by reasoning and imagination, if not blind faith. Yet, life did start somewhere, sometime, somehow. Trying to reconstruct the events that led to its birth holds almost irresistible fascination, especially now that we have available so much new knowledge on the nature of life and so many new tools for digging into the past and approaching the problem. (de Duve 1991: 110)

The tale is told in simple historical style, without any of the probability weightings, plausibility assessments, and other precautionary periphrases that it requires.[2] These will come in due course. According to my reconstruction, emerging life went through four main successive stagesor “worlds,” to use a popular expression: the primeval prebiotic world, the thioester world, the RNA world, and the DNA world. This version of the script differs from the current favorite mainly by the insertion of a thioester world. I consider this insertion essential because I cannot accept the view of an RNA world arising through purely random chemistry. (de Duve 1991: 112-113)

[2] The readers’ attention is called to this point, lest they be misled by the apparently dogmatic style of the script. All statements should be read as conditional and hypothetical. (112)

I have quoted Monod’s declaration “The Universe was not pregnant with life,” to which he added “nor the biosphere with man.” I have made it clear that I disagree with his first statement. Life belongs to the very fabric of the universe. Were it not an obligatory manifestation of the combinatorial properties of matter, it could not possibly have arisen naturally. By ascribing to chance an event of such unimaginable complexity and improbabilityremember Hoyle’s allegory of the Boeing 747 emerging from a junk yardMonod does, in fact, invoke a miracle. Much as he would have refused this description, he sides with the creationists. (de Duve 1991: 217)

Christian de Duve (Nobel Laureate) Blueprint for a Cell: The Nature and Origin of Life. Neil Patterson Publishers. 1991.

[T]here are a couple of important things that evolution is not, misleading claims by creationists [and materialists] notwithstanding. For example, evolution is not a theory of the origin of life, for the simple reason that evolution deals with changes in living organisms induced by a combination of random (mutation) and nonrandom (natural selection) forces. By definition, before life originated there were not mutations, and therefore there was no variation; hence, natural selection could not possibly have acted. This means that the origin of life is a (rather tough) problem for physics and chemistry to deal with, but not a proper area of inquiry for evolutionary biology. (Pigliucci 2002: 76)

(….) Evolution is also most definitely not a theory of the origin of the universe. As interesting as this question is, it is rather the realm of physics and cosmology. Mutation and natural selection, the mechanisms of evolution, do not have anything to do with stars and galaxies. It is true that some people, even astronomers, refer to the “evolution” of the universe, but this is meant in the general sense of change through time, not the technical sense of the Darwinian theory….. The origin of the universe, like the origin of life, is of course a perfectly valid scientific question, even though it is outside the realm of evolutionary biology. (Pigliucci 2002: 77)

(….) Is the fact that evolutionary theory can explain neither the origin of life nor the formation of the universe a “failure” of Darwinian evolution? Of course not. To apply evolutionary biology to those problems is like mixing apples and oranges, or like trying to understand a basketball play by applying the rules of baseball. Creationists [and materialists] often do this, but their doing so betrays either a fundamental misunderstanding of science or a good dose of intellectual dishonesty—neither of which should be condoned. (Pigliucci 2002: 78)

(….) [Creationists often claim “It’s a debate about origins.”] This is … a recurring fallacy in debates on creation-evolution…. Briefly, the problem is that creationists do not make a distinction between different origins debates. For them the origin of the universe, the origin of life, and the origin of species are all one and the same. (Pigliucci 2002: 175)

Of course, they are not. Evolutionary biology deals only with the origin of species, and even that is only a relatively minor part of what interests evolutionary biologists. Darwinian theories have absolutely nothing to say about either the origin of life or the origin of the universe—the first one being a problem for biochemistry and biophysics, the second a problem for physics and cosmology. Again, therefore, this fallacy reflects a deep misunderstanding of the nature of science, one that scientists themselves need to correct [or not perpetuate themselves] on every possible occasion. (Pigliucci 2002: 175)

Massimo Pigliucci (2002) Denying Evolution: Creationism, Scientism, and the Nature of Science

ORIGIN OF LIFE

Whether the proponents of hell or heaven theories finally convince their rivals of the most plausible scenario of the origin of the first replicating structures, it is clear that the origin of life is not a simple issue. One problem is the definition of life itself. From the ancient Greeks up through the early nineteenth century, people from European cultures believed that living things possessed an élan vital, or vital spirit—a quality that sets them apart from dead things and nonliving things such as minerals or water. Organic molecules, in fact, were thought to differ from other molecules because of the presence of this spirit. This view was gradually abandoned in science when more detailed study of the structure and functioning of living things repeatedly failed to discover any evidence for such an élan vital, and when it was realized that organic molecules could be synthesized from inorganic chemicals. Vitalistic ways of thinking persist in some East Asian philosophies, such as the concept of chi, but they have been abandoned in Western science for lack of evidence and because they do not lead to a better understanding of nature. (Scott 2009: 25-26)

How, then, can we define life? According to one commonly used scientific definition, if something is living, it is able to acquire and use energy, and to reproduce. The simplest living things today are primitive bacteria, enclosed by a membrane and not containing very many moving parts. But they can take in and use energy, and they can reproduce by division. Even this definition is fuzzy, though: what about viruses? Viruses, microscopic entities dwarfed by tiny bacteria, are hardly more than hereditary material in a packet—a protein shell. Are they alive? Well, they reproduce. They sort of use energy, in the sense that they take over a cell’s machinery to duplicate their own hereditary material. But they can also form crystals, which no living thing can do, so biologists are divided over whether viruses are living or not. They tend to be treated as a separate special category. (Scott 2009: 26)

(….) The origin of life is a complex but active research area with many interesting avenues being investigation, though there is not yet consensus among researchers on the sequence of events that led to living things. But at some point in Earth’s early history, perhaps as early as 3.8 billion years ago but definitely by 3.5 billion years ago, life in the form of simple single-celled organisms appeared. Once life evolved, biological evolution became possible. (Scott 2009: 26-27)

This is a point worth elaborating on. Although some people confuse the origin of life itself with evolution, the two are conceptually separate. Biological evolution is defined as decent of living things from ancestors from which they differ. Evolution kicks in after there is something, like a replicating structure, to evolve. So the origin of life preceded evolution, and is conceptually distinct from it. Regardless of how the first replicating molecule appeared, we see in the subsequent historical record the gradual appearance of more complex living things, and many variations on the many themes of life. Predictably, we know much more about evolution than about the origin of life. (Scott 2009: 27)

— Eugenie C. Scott (2009) Evolution vs. Creationism: An Introduction

Phishing for Phools

Mainstream economics takes the particular features of capitalism a very recent form of economic organisation in human history as if they were universal, timeless and rational. It treats market exchange as if it’s the essential feature of economic behaviour and relegates production or work a necessity of all provisioning to an afterthought. It also focuses primarily on the relationship between people and goods (what determines how many oranges we buy?) and pays little attention to the relationships between people that this presupposes. It values mathematical models based on if-pigs-could-fly assumptions more than it values empirical research; so it pays little attention to real economies, having little to say about money and debt, for example! Predictably, the dismal science failed to predict the crisis. When the UK’s Queen Elizabeth asked why no one saw the crisis coming, the economists’ embarrassment was palpable. (Sayer 2015, 23-24)

Andrew Sayer (2015) Why We Can’t Afford the Rich

[M]any of our problems come from the nature of the economic system itself. If business people behave in the purely selfish and self-serving way that economic theory assumes, our free-market system tends to spawn manipulation and deception. The problem is not that there are a lot of evil people. Most people play by the rules and are just trying to make a good living. But, inevitably, the competitive pressures for businessmen to practice deception and manipulation in free markets lead us to buy, and to pay too much for, products that we do not need; to work at jobs that give us little sense of purpose; and to wonder why our lives have gone amiss. (…) The economic system is filled with trickery and everyone needs to know about it.” (Akerlof & Shiller, 2015, viii)

[F]ree markets do not just deliver this cornucopia that people want. They also create an economic equilibrium that is highly suitable for economic enterprises that manipulate or distort our judgment, using business practices that are analogous to biological cancers that make their home in the normal equilibrium of the human body. (Akerlof and Shiller 2015, x)

George A. Akerlof and Robert J. Shiller (2015) Phishing for Phools: The Economics of Manipulation & Deception

Many of the quotes above are from economists, experts in their field, some Nobel Prize-winning economists. One thing is clear; the Great Recession shook the very foundations of economics to its core. Only the blind leading the blind can pretend today that something isn’t amiss within the field of economics. The quotations above only represent a small sampling of the discontent rising to the surface within the field of economics today. There is actually a revolt underway in the younger generation of economic graduate students who lived through the Great Recession and the near melt down of the world’s economy yet witnessed their teachers being confounded by the Queen’s question. And if we value our children’s and our grandchildren’s economic future we can no longer afford to simply leave economics to the expertsthe Econocracy—for as these young graduate students tell us, we do so at our own peril. Amartya Sen in his essay Rational Fools: A Critique of the Behavioral Foundations of Economic Theory takes us on an intellectual journey back in time to the thoughts and reflections of one of the founders of the field of economics:

In his Mathematical Psychics, published in 1881, Edgeworth asserted that ‘the first principle of Economics is that every agent is actuated only by self-interest’. This view has been a persistent one in economic models, and the nature of economic theory seem to have been much influenced by this basic premise…. I should mention that Edgeworth himself was quite aware that this so-called first principle of Economics was not a particularly realistic one. Indeed, he felt that ‘the concrete nineteenth century man is for the most part an impure egoist, a mixed utilitarian’. This raises the interesting question as to why Edgeworth spent so much of his time and talent in developing a line of inquiry the first principle of which he believed to be false. The issue is not why abstractions should be employed in pursuing economic questionsthe nature of inquiry makes this inevitablebut why would one choose an assumption which he himself believed not merely inaccurate in detail but fundamentally mistaken? (Sen 1982, 84-85)

Amartya Sen (1982) Rational Fools

Imaginary Empty Balls

The answer, therefore, which the seventeenth century gave to the ancient question … “What is the world made of?” was that the world is a succession of instantaneous configurations of matter — or material, if you wish to include stuff more subtle than ordinary matter…. Thus the configurations determined there own changes, so that the circle of scientific thought was completely closed. This is the famous mechanistic theory of nature, which has reigned supreme ever since the seventeenth century. It is the orthodox creed of physical science…. There is an error; but it is merely the accidental error of mistaking the abstract for the concrete. It is an example of what I will call the ‘Fallacy of Misplaced Concreteness.’ This fallacy is the occasion of great confusion in philosophy. (Whitehead 1967: 50-51)

(….) This conception of the universe is surely framed in terms of high abstractions, and the paradox only arises because we have mistaken our abstractions for concrete realities…. The seventeenth century had finally produced a scheme of scientific thought framed by mathematics, for the use of mathematics. The great characteristic of the mathematical mind is its capacity for dealing with abstractions; and for eliciting from them clear-cut demonstrative trains of reasoning, entirely satisfactory so long as it is those abstractions which you want to think about. The enormous success of the scientific abstractions, yielding on the one hand matter with its simple location in space and time, on the other hand mind, perceiving, suffering, reasoning, but not interfering, has foisted onto philosophy the task of accepting them as the most concrete rendering of fact. (Whitehead 1967: 54-55)

Thereby, modern philosophy has been ruined. It has oscillated in a complex manner between three extremes. These are the dualists, who accept matter and mind as on an equal basis, and the two varieties of monists, those who put mind inside matter, and those who put matter inside mind. But this juggling with abstractions can never overcome the inherent confusion introduced by the ascription of misplaced concreteness to the scientific scheme of the seventeenth century. (Whitehead 1967: 55)

Alfred North Whitehead in Science and the Modern World

In the UK, for example, 97 percent of money is created by commercial banks and its character takes the form of debt-based, interest-bearing loans. As for its intended use? In the 10 years running up to the 2008 financial crash, over 75 percent of those loans were granted for buying stocks or houses—so fuelling the house-price bubble—while a mere 13 percent went to small businesses engaged in productive enterprise.47 When such debt increases, a growing share of a nation’s income is siphoned off as payments to those with interest-earning investments and as profit for the banking sector, leaving less income available for spending on products and services made by people working in the productive economy. ‘Just as landlords were the archetypal rentiers of their agricultural societies,’ writes economist Michael Hudson, ‘so investors, financiers and bankers are in the largest rentier sector of today’s financialized economies.’ (Raworth 2017, 155)

Once the current design of money is spelled out this way—its creation, its character and its use—it becomes clear that there are many options for redesigning it, involving the state and the commons along with the market. What’s more, many different kinds of money can coexist, with the potential to turn a monetary monoculture into a financial ecosystem. (Raworth 2017, 155)

Imagine, for starters, if central banks were to take back the power to create money and then issue it to commercial banks, while simultaneously requiring them to hold 100 percent reserves for the loans that they make—meaning that every loan would be backed by someone else’s savings, or the bank’s own capital. It would certainly separate the role of providing money from the role of providing credit, so helping to prevent the build-up of debt-fuelled credit bubbles that burst with such deep social costs. That idea may sound outlandish, but it is neither a new nor a fringe suggestion. First proposed during the 1930s Great Depression by influential economists of the day such as Irving Fisher and Milton Friedman, it gained renewed support after the 2008 crash, gaining the backing of mainstream financial experts at the International Monetary Fund and Martin Wolf of the UK’s Financial Times. (Raworth 2017, 155-156)

Kate Raworth in Doughnut Economics

Suggestions are anchored in neoclassical theory

Despite growing diversity in research, the theory flow of economics, often referred to as neoclassical, continues to dominate teaching and politics. It developed in the 19th century as an attempt to apply the methods of the natural sciences and especially physics to social phenomena, In the search for an “exact” social science, social relationships are abstracted to such an extent that calculations are possible. The neoclassical economics department primarily asks one question: How do rational actors optimize under certain circumstances? This approach is nothing bad in and of itself. However, in view of the ecological crisis, we have to ask ourselves completely different questions in society: How can the planetary collapse be prevented? What can an economic system look like that is social, fair and ecological?

Katharina Keil and Max Wilken

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The dematerialization of the value concept boded ill for the tangible world of stable time and concrete motion (Kern 1983). Again, the writer Jorge Luis Borges (1962, p. 159) captured the mood of the metaphor: (Mirowski 1989, 134. Kindle Location 2875-2877)

I reflected there is nothing less material than money, since any coin whatsoever (let us say a coin worth twenty centavos) is, strictly speaking, a repertory of possible futures. Money is abstract, I repeated; money is the future tense. It can be an evening in the suburbs, or music by Brahms; it can be maps, or chess, or coffee; it can be the words of Epictetus teaching us to despise gold; it is a Proteus more versatile than the one on the isle of Pharos. It is unforeseeable time, Bergsonian time . . . (Mirowski 1989, 134-135. Kindle Location 2877-2881)

It was not solely in art that the reconceptualization of value gripped the imagination. Because the energy concept depended upon the value metaphor in part for its credibility, physics was prodded to reinterpret the meaning of its conservation principles. In an earlier, simpler era Clerk Maxwell could say that conservation principles gave the physical molecules “the stamp of the manufactured article” (Barrow and Tipler 1986, p. 88), but as manufacture gave way to finance, seeing conservation principles in nature gave way to seeing them more as contingencies, imposed by our accountants in order to keep confusion at bay. Nowhere is this more evident than in the popular writings of the physicist Arthur Eddington, the Stephen Jay Gould of early twentieth century physics: (Mirowski 1989, 135. Kindle Location 2881-2887)

The famous laws of conservation and energy . . . are mathematical identities. Violation of them is unthinkable. Perhaps I can best indicate their nature by an analogy. An aged college Bursar once dwelt secluded in his rooms devoting himself entirely to accounts. He realised the intellectual and other activities of the college only as they presented themselves in the bills. He vaguely conjectured an objective reality at the back of it all some sort of parallel to the real college though he could only picture it in terms of the pounds, shillings and pence which made up what he would call “the commonsense college of everyday experience.” The method of account-keeping had become inveterate habit handed down from generations of hermit-like bursars; he accepted the form of the accounts as being part of the nature of things. But he was of a scientific turn and he wanted to learn more about the college. One day in looking over the books he discovered a remarkable law. For every item on the credit side an equal item appeared somewhere else on the debit side. “Ha!” said the Bursar, “I have discovered one of the great laws controlling the college. It is a perfect and exact law of the real world. Credit must be called plus and debit minus; and so we have the law of conservation of £. s. d. This is the true way to find out things, and there is no limit to what may ultimately be discovered by this scientific method . . .” (Mirowski 1989, 135. Kindle Location 2887-2898)

I have no quarrel with the Bursar for believing that scientific investigation of the accounts is a road to exact (though necessarily partial) knowledge of the reality behind them . . . But I would point out to him that a discovery of the overlapping of the different aspects in which the realities of the college present themselves in the world of accounts, is not a discovery of the laws controlling the college; that he has not even begun to find the controlling laws. The college may totter but the Bursar’s accounts still balance . . . (Mirowski 1989, 135-136. Kindle Location 2898-2902)

Perhaps a better way of expressing this selective influence of the mind on the laws of Nature is to say that values are created by the mind [Eddington 1930, pp. 237–8, 243]. (Mirowski 1989, 136. Kindle Location 2903-2904)

Once physicists had become inured to entertaining the idea that value is not natural, then it was a foregone conclusion that the stable Laplacean dreamworld of a fixed and conserved energy and a single super-variational principle was doomed. Again, Eddington stated it better than I could hope to: (Mirowski 1989, 136. Kindle Location 2904-2907)

[Classical determinism] was the gold standard in the vaults; [statistical laws were] the paper currency actually used. But everyone still adhered to the traditional view that paper currency needs to be backed by gold. As physics progressed the occasions when the gold was actually produced became career until they ceased altogether. Then it occurred to some of us to question whether there still was a hoard of gold in the vaults or whether its existence was a mythical tradition. The dramatic ending of the story would be that the vaults were opened and found to be empty. The actual ending is not quite so simple. It turns out that the key has been lost, and no one can say for certain whether there is any gold in the vaults or not. But I think it is clear that, with either termination, present-day physics is off the gold standard [Eddington 1935, p. 81]. (Mirowski 1989, 136. Kindle Location 2907-2913)

The denaturalization of value presaged the dissolution of the energy concept into a mere set of accounts, which, like national currencies, were not convertable at any naturally fixed rates of exchange. Quantum mechanical energy was not exactly the same thing as relativistic energy or thermodynamic energy. Yet this did not mean that physics had regressed to a state of fragmented autarkies. Trade was still conducted between nations; mathematical structure could bridge subdisciplines of physics. It was just that everyone was coming to acknowledge that money was provisional, and that symmetries expressed by conservatiori principles were contingent upon the purposes of the theory in which they were embedded. (Mirowski 1989, 136. Kindle Location 2913-2918)

Increasingly, this contingent status was expressed by recourse to economic metaphors. The variability of metrics of space-time in general relativity were compared to the habit of describing inflation in such torturous language as: “The pound is now only worth seven and sixpence” (Eddington 1930, p. 26). The fundamentally stochastic character of the energy quantum was said to allow nuclear particles to “borrow” sufficient energy so that they could “tunnel” their way out of the nucleus. And, inevitably, if we live with a banking system wherein money is created by means of loans granted on the basis of near-zero fractional reserves, then this process of borrowing energy could cascade, building upon itself until the entire universe is conceptualized as a “free lunch.” The nineteenth century would have recoiled in horror from this idea, they who believed that banks merely ratified the underlying real transactions with their loans. (Mirowski 1989, 136-137. Kindle Location 2918-2925)

Goldman Sachs and Flash Boys

In the City, they sell and buy. And nobody ever asks them why. But since it contents them to buy and sell, God forgive them, they might as well.

Humbert Wolfe, The Uncelestial City, 1940

Front-running in the name of ‘democratizing’ Wall Street

Unlike most trading platforms, it [Robinhood] does not charge a commission for letting users buy and sell shares. Instead it makes money by selling data on those deals to others before they go through.

— Elon Must grills Robinhood boss over GameStop row on Clubhouse, BBC

There is no such thing as a free lunch. Just as social media platforms like Facebook have been used to manipulate class grievances and spread falsehoods the claim that Robinhood is ‘democratizing’ Wall Street and putting the ‘little guy’ aka retail investors on an even playing field is another Big Lie. But to understand why requires a sophisticated understanding of how Wall Street trading of stocks really works and that nanoseconds matter. It is based on not just information but timing and we are talking about microseconds or perhaps even nanoseconds (think quantum computing).

‘High-frequency trading’ is undertaken by computers which are constantly offering to buy and sell securities. The interval for which these securities are held by their owner may—literally—be shorter than the blink of an eye. Spread Networks, a telecoms provider, has recently built a link through the Appalachian Mountains to reduce the time taken to transmit data between New York and Chicago by a little less than one millisecond. (Kay 2015, 2)

John Kay, Other People’s Money: The Real Business of Finance

What better way to manipulate the market than to aggregate the trades and sell the information before the trades are made to front-run the “little guy” so the platform doesn’t charge transaction fees but does let the “little guy” buy on “leverage” aka credit so they can lose their shirt, house, and everything else and then hold his trade long enough to sell the information to high-frequency traders who can then front-run them. We need to be asking “Who is Robinhood selling this information to? Who would profit from such information to a degree greater than Robinhood’s client trading costs and therefore be willing to pay for it? And what are they doing with it?” Epistemic Inequality is a dangerous thing. By holding its clients trades long enough to sell information about those trades to a third-party the cost of the ‘free lunch’ is a dystopian future of Surveillance Capitalism.

When you combine ignorance and leverage, you get some pretty interesting results.

Warren Buffett, on the global financial crisis, 2008

When Robinhood delays their retail-investor’s stock transactions in lieu of charging a commission this gives the illusion of something for nothing (i.e., ‘democratizing’ Wall Street with a ‘free lunch’) for its “retail investor” clients. But this is sham, a fraud, for Robinhood is collecting its commissions by selling its “retail investor” stock data information on trading positions while holding/delaying the trade going through so third-parties can profit on this information at the “retail investors” expense. This trading data can then be used to front-run the positions of Robinhood’s “retail investors.” This is Surveillance Capitalism at its best!

Lucky fools do not bear the slightest suspicion that they may be lucky fools.

Nassim Nicholas Taleb, Fooled by Randomness, 2001

We the public have no idea at this time who the real people are profiting overall from this phenomena; it could even be outside foreign powers with a larger agenda such as destabilizing the US economy. As the SEC says, to find out who is really behind it you must follow the money; for those who profit most are most likely those who are behind this front-running market manipulation. The majority of actual “retail investors” who are being pumped up on Reddit to hold until the end will lose much depending on how leveraged they are. A few will make a killing, make the news, and further pump the dump. But in the end the one’s who really make a killing over the long haul are those who have the millisecond advantage and the cash to purchase Robinhood’s “retail client” positions and based upon this asymmetric (insider?) information take trading positions to win on the up-side and down-side (win-win) while the “retail investors” are left with win-some lose-many.

In the long haul the stock market cycle of creating bursting bubbles is a numbers game in which the only people really winning are Robinhood and its third-party clients who roll in the cash on the backs of the con of the retail investors. Only a fool thinks outside investors would drop 3.4 billion into Robinhood overnight if not for the fact that it was a win-win regardless of the fact that what wild speculation drives up based upon no intrinsic value inevitably will come crashing down. They have already banked (front-run) their profits and left many naïve retail investors qua speculative day traders who bought into this Ponzi scheme no chair to sit in when the music stops. This in the end is nothing but a massive transfer of wealth from the middle class to the wealthiest 1% in the world.

The goose that lays the golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else’s goose. The investment bankers and their associates [aka financial services qua Robinhood] now enjoy that privilege. They control the people through the people’s own money.

Louis Brandeis, Other People’s Money, 1914

The junk merchant doesn’t sell his product to the consumer, he sells the consumer to his product.

William S. Burroughs, Letter from a Master Addict to Dangerous Drugs, 1956

Robinhood sells its retail customer’s trading data as its product. Robinhood’s real customers are those who pay for this time-delayed “retail investor” data. How convenient to misdirect the outrage at Robinhood’s halting trading when its clearing house demanded it put up 3 billion cash to back its positions. Like all misleading and/or disinformation, this directs the “retail investors” anger away from the real abuse of Robinhood, which is not stealing from the rich and giving to the poor but fleecing the not-so-poor out of their money by delaying their trade while selling their stock positions (data) to potential third-parties who can then trade to their own advantage based upon this information. What the retail investors should be angry about and asking for is absolute transparency as to why their trades are delayed while their data is sold to third-parties, who these third-parties are, and how is their time-delayed trade data being used by these third-parties?

Someone out there was using the fact that stock market orders arrived at different times at different exchanges to front-run orders from one market to another…. [He] explained … how his team had placed big trades to measure how much more cheaply they bought stock when they removed the ability of the machine to front-run them….

“It happens on such a granular level that even if you tried to line it up and figure it out you wouldn’t be able to do it. People are getting screwed because they can’t imagine a microsecond.”

When bids and offers for shares sent to these places arrived at precisely the same moment, the markets acted as markets should. If they arrived even a millisecond apart, the market vanished, and all bets were off. [He] knew that he was being front-run—that some other trader was, in effect, noticing his demand for stock on one exchange and buying it on others in anticipation of selling it to him at a higher price.

— Lewis, Michael. Flash Boys: A Wall Street Revolt . W. W. Norton & Company. Kindle Edition

It took only a few weeks for a consortium of high-frequency traders to marshal an army of lobbyists and publicists to make their case for them. These condottieri set about erecting lines of defense for their patrons. Here was the first: The only people who suffer from high-frequency traders are even richer hedge fund managers, when their large stock market orders are detected and front-run. It has nothing to do with ordinary Americans. Which is such a weird thing to say that you have to wonder what is going through the mind of anyone who says it. It’s true that among the early financial backers of IEX were three of the world’s most famous hedge fund managers (Bill Ackman, David Einhorn, and Daniel Loeb). But rich hedge fund managers aren’t the only investors who submit large orders to the stock market that can be detected and front-run by high-frequency traders. Mutual funds and pension funds and university endowments also submit large stock market orders, and these, too, can be detected and front-run by high-frequency traders. The vast majority of American middle-class savings are managed by such institutions.

Lewis, Michael. Flash Boys: A Wall Street Revolt . W. W. Norton & Company. Kindle Edition.

When angry class grievance mixed with greed and desire for a quick profit are joined with an army of “little guys” jumping into the market on a SPAC Jesus rumor and randomly running up the price of stocks based not on any intrinsic value in the underlying asset but only anger at the “big guy” aka hedge funds and greed for quick capital gains unaware of front-running because of their greed, anger, and mob psychology riled-up by Reddit social media posts the golden age of fraud has dawned and we have entered the era of the ‘democratization’ of Long-Term Front-Running and turned the entire American economy into the wrecking ball of casino capitalism.

“We’re living in a time of absolutely unprecedented uncertainty,” she said. “There really is no reason for anyone in their twenties to imagine that their 401(k) is going to pay off in 50, 60 years the way it did for their parents. And I’m not saying they shouldn’t believe it. I’m just saying they have good reason not to”. WallstreetBets Poster

Why should I care about posterity? What has posterity ever done for me?

Attributed to Groucho Marx, but also credited to various eighteenth-century English figures

There is a wide range of reasons used to justify jumping into day trading, running from just wanting to make a quick buck to a nihilistic desire to blow the system up. One thing is sure, what goes up must come crashing down. This house of cards will fall and with it potentially the American economy and middle class with it experiencing another Great Depression worse than 1929. This will be the prelude to the next American Demagogue, perhaps even Trump 2024, and the end of any of hope of progressive change in America. Unless this angry mob psychology is swiftly redirected to political activism, such as outlawing short-selling and leveraged speculation and bringing transparency, fairness, and robust regulation to the stock market which can only be done by the regulatory subpoena power of the SEC more economic destruction is likely to follow the destruction already wrought by the pandemic and four long years of Grifting Trumpism.

We are investment bankers [and financial services like Robinhood]. We don’t care what happens in five years.

Vincent Dahinden, head of global structured products, Royal Bank of Scotland, Institutional Investor, 12 February 2004

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. The measure of success attained by Wall Street, regarded as an institution of which the proper social purpose is to direct new investment into the most profitable channels in terms of future yield, cannot be claimed as one of the outstanding triumphs of laissez-faire capitalism which is not surprising, if I am right in thinking that the best brains of Wall Street have been in fact directed towards a different object. (Keynes 1936, 97)

These tendencies are a scarcely avoidable outcome of our having successfully organised ‘liquid’ investment markets. It is usually agreed that casinos should, in the public interest, be inaccessible and expensive. And perhaps the same is true of stock exchanges. That the sins of the London Stock Exchange are less than those of Wall Street may be due, not so much to differences in national character, as to the fact that to the average Englishman Throgmorton Street is, compared with Wall Street to the average American, inaccessible and very expensive. The jobber’s ‘turn’, the high brokerage charges and the heavy transfer tax payable to the Exchequer, which attend dealings on the London Stock Exchange, sufficiently diminish the liquidity of the market (although the practice of fortnightly accounts operates the other way) to rule out a large proportion of the transactions characteristic of Wall Street. The introduction of a substantial Government transfer tax on all transactions might prove the most serviceable reform available, with a view to mitigating the predominance of speculation over enterprise in the United States. (Keynes 1936, 97)

— J. M. Keynes, The General Theory of Employment, Interest and Money, 1936

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I suppose this book started when I first heard the story of Sergey Aleynikov, the Russian computer programmer who had worked for Goldman Sachs and then, in the summer of 2009, after he’d quit his job, was arrested by the FBI and charged by the United States government with stealing Goldman Sachs’s computer code. I’d thought it strange, after the financial crisis, in which Goldman had played such an important role, that the only Goldman Sachs employee who had been charged with any sort of crime was the employee who had taken something from Goldman Sachs. I’d thought it even stranger that government prosecutors had argued that the Russian shouldn’t be freed on bail because the Goldman Sachs computer code, in the wrong hands, could be used to “manipulate markets in unfair ways.” (Goldman’s were the right hands? If Goldman Sachs was able to manipulate markets, could other banks do it, too?) But maybe the strangest aspect of the case was how difficult it appeared to be—for the few who attempted—to explain what the Russian had done. I don’t mean only what he had done wrong: I mean what he had done. His job. He was usually described as a “high-frequency trading programmer,” but that wasn’t an explanation. That was a term of art that, in the summer of 2009, most people, even on Wall Street, had never before heard. What was high-frequency trading? Why was the code that enabled Goldman Sachs to do it so important that, when it was discovered to have been copied by some employee, Goldman Sachs needed to call the FBI? If this code was at once so incredibly valuable and so dangerous to financial markets, how did a Russian who had worked for Goldman Sachs for a mere two years get his hands on it? (Lewis 2014, 40-53)

[I]n a room looking out at the World Trade Center site, at One Liberty Plaza … gathered a small army of shockingly well-informed people from every corner of Wall Street—big banks, the major stock exchanges, and high-frequency trading firms. Many of them had left high-paying jobs to declare war on Wall Street, which meant, among other things, attacking the very problem that the Russian computer programmer had been hired by Goldman Sachs to create. (Lewis 2014, 53-56)

(….) One moment all is well; the next, the value of the entire U.S. stock market has fallen 22.61 percent, and no one knows why. During the crash, some Wall Street brokers, to avoid the orders their customers wanted to place to sell stocks, simply declined to pick up their phones. It wasn’t the first time that Wall Street people had discredited themselves, but this time the authorities responded by changing the rules—making it easier for computers to do the jobs done by those imperfect people. The 1987 stock market crash set in motion a process—weak at first, stronger over the years—that has ended with computers entirely replacing the people. (Lewis 2014, 62-67)

Over the past decade, the financial markets have changed too rapidly for our mental picture of them to remain true to life. (Lewis 2014, 67)

(….) The U.S. stock market now trades inside black boxes, in heavily guarded buildings in New Jersey and Chicago. What goes on inside those black boxes is hard to say—the ticker tape that runs across the bottom of cable TV screens captures only the tiniest fraction of what occurs in the stock markets. The public reports of what happens inside the black boxes are fuzzy and unreliable—even an expert cannot say what exactly happens inside them, or when it happens, or why. The average investor has no hope of knowing, of course, even the little he needs to know. He logs onto his TD Ameritrade or E*Trade or Schwab account, enters a ticker symbol of some stock, and clicks an icon that says “Buy”: Then what? He may think he knows what happens after he presses the key on his computer keyboard, but, trust me, he does not. If he did, he’d think twice before he pressed it. (Lewis 2014, 72-78)

The world clings to its old mental picture of the stock market because it’s comforting; because it’s so hard to draw a picture of what has replaced it; and because the few people able to draw it for you have no [economic] interest in doing so. (Lewis 2014, 78-80)

Anti-Human Economics

Emily Northrop (2000) questions whether the fundamental cause of scarcity unlimited wants is really innate, and argues that it may be merely constructed [see Diamonds are Bullshit]. She notes that some people manage to resist consumerism and choose different lifestyles embodying simplicity, balance or connection (to the earth and to others). The fact that some are able to do this suggests unlimited wants aren’t innate. In arguing that our wants are constructed, she emphasizes the power of social norms and the power of advertising: some of society’s cleverest people and billions of dollars a year are spent creating and maintaining our wants. (Hill and Myatt 2010, 16)

Northrop also points out that the notion of unlimited wants puts all wants on an equal footing: one person’s want for a subsistence diet is no more important than a millionaire’s want for precious jewellery. This equality of wants reflects the market value system that no goods are intrinsically more worthy than others just as no preferences are more worthy than others. This is clearly a value judgement and one that many people reject. Yet economics, which unquestioningly adopts this approach, claims to be an objective social science that avoids making value judgements! (Hill and Myatt 2010, 16)

It is noteworthy that Keynes disagreed that ‘all wants have equal merit’. Rather than identify the economic problem with scarcity, he identified it with the satisfaction of what he called absolute needs: food, clothing, shelter and healthcare (Keynes 1963 [1931]: 365). This definition of the economic problem puts equity and the distribution of income front and centre. It contrasts with the textbook approach of treating equity as a political issue outside the scope of economic analysis. (Hill and Myatt 2010, 16)

Another economist who rejects the ‘innate unlimited wants’ idea is Stephen Marglin (2008). Unlike Northrop, he doesn’t blame advertising or social norms. Rather, he sees the fundamental cause to be the destruction of community ties, which creates an existential vacuum: all that’s left is stuff. Goods and services substitute for meaningful relationships with family, friends and community. His conclusion: as long as goods are a primary means of solving existential problems, we will always want more. But what or who is responsible for undermining community ties and bonds? Marglin argues that the assumptions of textbook economics, and the resulting policy recommendations of economists, undermine community…. (Hill and Myatt 2010, 16-17)

According to Marglin, the textbook focus on individuals makes the community invisible to economists’ eyes. But it is our friendships and deep connections with others which give our lives meaning. So community ties, built on mutual trust and common purpose, have a value a value that economists ignore when recommending policy.

Furthermore, Marglin argues that rational choice theory emphasized in the mainstream textbooks reduces ethical judgements and values to mere preferences. Are you working for the benefit of your community? That’s your preference. Are you cooking the books to get rich quick and devil take the hindmost? That’s your preference. Being selfish is no worse than being altruistic, they are just different preferences. (Hill and Myatt 2010, 16)

Indeed, according to mainstream textbook economics it is smart to be selfish. It not only maximizes your own material well-being, but through the invisible hand of the market it also produces the greatest good for the greatest possible number. This view influences the cultural norms of society and indirectly erodes community. This influence of economics on attitudes isn’t mere speculation. Marwell and Ames (1981) document that exposure to economics generates less cooperative, less other-regarding, behaviour. Frank et al. (1993) show that uncooperative behaviour increases the more individuals are exposed to economics. (Hill and Myatt 2010, 17-18)

(….) Marglin argues that the textbook focus on individuals is problematic. John Kenneth Galbraith went farther. He thought the textbook focus on individuals was a source of grave error and bias because in the real world the individual is not the agent that matters most. The corporation is. By having the wrong focus, economics is able to deny the importance of power and political interests. (Hill and Myatt 2010, 18)

Further, textbooks assume that the state is subordinate to individuals through the ballot box. At the very least, government is assumed to be neutral, intervening to correct market failure as best it can, and to redistribute income so as to make market outcomes more equitable. (Hill and Myatt 2010, 18-19)

But this idealized world is so far removed from the real world that it is little more than a myth, or ‘perhaps even a fraud’ (John K. Galbraith 2004). The power of the largest corporations rivals that of the state; indeed, they often hijack the state’s power for their own purposes. In reality, we see the management of the consumer by corporations; and we see the subordination of the state to corporate interest. (Hill and Myatt 2010, 19)

(….) Galbraith argues that the biggest corporations have power over markets, power in the community, power over the state, and power over belief. As such, the corporation is a political instrument, different in form and degree but not in kind from the state itself. Textbook economics, in denying that power, is part of the problem. It stops us from seeing how we are governed. As such it becomes an ‘ally of those whose exercise of power depends on an acquiescent public’ (John K. Galbraith 1973a: 11). (Hill and Myatt 2010, 19-20)

Spotting the Spoof

I came to think of humans as a kind of Turing machine. I searched for stories which reinforced the parable. There were many of them. However, Üxküll’s tick story was the most impressive (Kindle Locations 884-887). (….) Üxküll’s tick and the Turing machine parable all fitted together in one idea (Kindle Locations 900-907). (….) We find an astonishing coincidence with my Turing machine parable of animal and human behaviors…. This is the most primitive case of the definition of the situation.

(Shiozawa et. al. (2019) Microfoundations of Evolutionary Economics. Kindle Locations 884-887, 900-907, 926-933. Springer Japan. Emphasis added.)

According to this view, individuals within an economy follow simple rules of thumb to determine their course of action. However, they adapt to their environment by changing the rules they use when these prove to be less successful. They are not irrational in that they do not act against their own interests, but they have neither the information nor the calculating capacity to ‘optimise’. Indeed, they are assumed to have limited and largely local information, and they modify their behaviour to improve their situation. Individuals in complexity models are neither assumed to understand how the economy works nor to consciously look for the ‘best choice’. The main preoccupation is not whether aggregate outcomes are efficient or not but rather with how all of these different individuals interacting with each other come to coordinate their behaviour. Giving individuals in a model simple rules to follow and allowing them to change them as they interact with others means thinking of them much more like particles or social insects. Mainstream economists often object to this approach, arguing that humans have intentions and aims which cannot be found in either inanimate particles or lower forms of life.

Kirman et. al. (2018, 95) in Rethinking Economics: An Introduction to Pluralist Economics, Routledge.

Even such purely academic theories as interpretations of human nature have profound practical consequences if disseminated widely enough. If we impress upon people that science has discovered that human beings are motivated only by the desire for material advantage, they will tend to live up to this expectation, and we shall have undermined their readiness to moved by impersonal ideals. By propagating the opposite view we might succeed in producing a larger number of idealists, but also help cynical exploiters to find easy victims. This specific issue, incidentally, is of immense actual importance, because it seems that the moral disorientation and fanatic nihilism which afflict modern youth have been stimulated by the popular brands of sociology and psychology [and economics] with their bias for overlooking the more inspiring achievements and focusing on the dismal average or even the subnormal. When, fraudulently basking in the glory of the exact sciences, the psychologists [, theoretical economists, etc.,] refuse to study anything but the most mechanical forms of behavior—often so mechanical that even rats have no chance to show their higher faculties—and then present their mostly trivial findings as the true picture of the human mind, they prompt people to regard themselves and others as automata, devoid of responsibility or worth, which can hardly remain without effect upon the tenor of social life. (….) Abstrusiveness need not impair a doctrine’s aptness for inducing or fortifying certain attitudes, as it may in fact help to inspire awe and obedience by ‘blinding people with science’.

— Andreski (1973, 33-35) in Social Sciences as Sorcery. Emphasis added.

Complexity theory comes with its own problems of over-reach and tractability. Context counts; any theory taken to far stretches credulity. The art is in spotting the spoof. It is true irony to watch the pot calling the kettle black! To wit, mainstream economists questioning the validity of complexity theories use of greedy reductionism — often for the sole purpose of mathematical tractability — when applied to human beings; just because mainstream economists also have unrealistic assumptions (i.e., homo economicus) that overly simplify human behavior and capabilities doesn’t invalidate such a critique. Just because the pot calls the kettle black doesn’t mean the kettle and the pot are not black. Building models of human behavior solely on rational expectations and/or “social insects” qua fitness climbing ticks means we are either Gods or Idiots. Neither Gödel nor Turing reduced creatively thinking human beings to mere Turing machines.

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The best dialogues take place when each interlocutor speaks from her best self, without pretending to be something she is not. In their recent book Phishing for Phools: The Economics of Manipulation and Deception, Nobel Prize–winning economists George Akerlof and Robert Shiller expand the standard definition of “phishing.” In their usage, it goes beyond committing fraud on the Internet to indicate something older and more general: “getting people to do things that are in the interest of the phisherman” rather than their own. In much the same spirit, we would like to expand the meaning of another recent computer term, “spoofing,” which normally means impersonating someone else’s email name and address to deceive the recipient—a friend or family member of the person whose name is stolen—into doing something no one would do at the behest of a stranger. Spoofing in our usage also means something more general: pretending to represent one discipline or school when actually acting according to the norms of another. Like phishing, spoofing is meant to deceive, and so it is always useful to spot the spoof.

Students who take an English course under the impression they will be taught literature, and wind up being given lessons in politics that a political scientist would scoff at or in sociology that would mystify a sociologist, are being spoofed. Other forms of the humanities—or dehumanities, as we prefer to call them—spoof various scientific disciplines, from computer science to evolutionary biology and neurology. The longer the spoof deceives, the more disillusioned the student will be with what she takes to be the “humanities.” (Morson, Gary Saul. Cents and Sensibility (pp. 1-2). Princeton University Press. Kindle Edition.)

By the same token, when economists pretend to solve problems in ethics, culture, and social values in purely economic terms, they are spoofing other disciplines, although in this case the people most readily deceived are the economists themselves. We will examine various ways in which this happens and how, understandably enough, it earns economists a bad name among those who spot the spoof.

But many do not spot it. Gary Becker won a Nobel Prize largely for extending economics to the furthest reaches of human behavior, and the best-selling Freakonomics series popularizes this approach. What seems to many an economist to be a sincere effort to reach out to other disciplines strikes many practitioners of those fields as nothing short of imperialism, since economists expropriate topics rather than treat existing literatures and methods with the respect they deserve. Too often the economic approach to interdisciplinary work is that other fields have the questions and economics has the answers. (Morson, Gary Saul. Cents and Sensibility (pp. 2-3). Princeton University Press. Kindle Edition.)

As with the dehumanities, these efforts are not valueless. There is, after all, an economic aspect to many activities, including those we don’t usually think of in economic terms. People make choices about many things, and the rational choice model presumed by economists can help us understand how they do so, at least when they behave rationally—and even the worst curmudgeon acknowledges that people are sometimes rational! We have never seen anyone deliberately get into a longer line at a bank. (Morson, Gary Saul. Cents and Sensibility (p. 3). Princeton University Press. Kindle Edition.)

Even regarding ethics, economic models can help in one way, by indicating what is the most efficient allocation of resources. To be sure, one can question the usual economic definition of efficiency—in terms of maximizing the “economic surplus”—and one can question the establishment of goals in purely economic terms, but regardless of which goals one chooses, it pays to choose an efficient way, one that expends the least resources, to reach them. Wasting resources is never a good thing to do, because the resources wasted could have been put to some ethical purpose. The problem is that efficiency does not exhaust ethical questions, and the economic aspect of many problems is not the most important one. By pretending to solve ethical questions, economists wind up spoofing philosophers, theologians, and other ethicists. Economic rationality is indeed part of human nature, but by no means all of it.

For the rest of human nature, we need the humanities (and the humanistic social sciences). In our view, numerous aspects of life are best understood in terms of a dialogue between economics and the humanities—not the spoofs, but real economics and real humanities. (Morson, Gary Saul. Cents and Sensibility (pp. 3-4). Princeton University Press. Kindle Edition.)

Value Crisis of Modernity

There are many examples in the modern world showing how this doctrine of the free market—the pursuit of self-interest—has worked out to the disadvantage of society.

— CAMBRIDGE PROFESSOR JOAN ROBINSON, 1977, cited in Buddhist Economics.

The approach used here concentrates on a factual basis that differentiates it from more traditional practical ethics and economic policy analysis, such as the “economic” concentration on the primacy of income and wealth (rather than on the characteristics of human lives and substantive freedoms).

— NOBEL LAUREATE AMARTYA SEN, DEVELOPMENT AS FREEDOM, cited in Buddhist Economics

In Buddhist economics, people are interdependent with one another and with Nature, so each person’s well-being is measured by how well everyone and the environment are functioning with the goal of minimizing suffering for people and the planet. Everyone is assumed to have the right to a comfortable life with access to basic nutrition, health care, education, and the assurance of safety and human rights. A country’s well-being is measured by the aggregation of the well-being of all residents and the health of the ecosystem.

Brown (2017, 2), in Buddhist Economics

As Toyota President Akio Toyoda recently commented, Toyota’s renewed commitment to society extends from putting customers first to “putting people first” and aiming to serve society as a whole. This mission statement stems from Toyota’s earliest values and explains why the company is closely aligned to the Sustainable Development Goals as inspiration for its long-term global sustainability strategy. At a European-level, the company is following this lead by contributing to society through its social and employment practices, such as its focus on diversity and inclusion

(….) “As we transform from an automotive to mobility company, and to produce mass happiness, we need to make more than cars, vans and trucks. We need to align with the Sustainable Development Goals, Green Deal and a better future”

Automotive World, Toyota’s mission to produce “happiness for all” with its business transformation programme, December 7, 2020

We live in the age of kikikan (危機感). Civilizational crisis is everywhere to be seen for those who are awake. The way forward is gapponshugi, a vision embodying a new motive for economic striving.

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In the most dramatic moments of Italy’s debt crisis, the newly installed “technical” government, led by Mario Monti, appealed to trade unions to accept salary cuts in the name of national solidarity. Monti urged them to participate in a collective effort to increase the competitiveness of the Italian economy (or at least to show that efforts were being made in that direction) in order to calm international investors and “the market” and, hopefully, reduce the spread between the interest rates of Italian and German bonds (at the time around 500 points, meaning that the Italian government had to refinance its ten-year debt at the excruciating rate of 7.3 percent). Commenting on this appeal in an editorial in the left-leaning journal Il Manifesto, the journalist Loris Campetti wondered how it could be at all possible to demand solidarity from a Fiat worker when the CEO of his company earned about 500 times what the worker did.1 And such figures are not unique to Italy. In the United States, the average CEO earned about 30 times what the average worker earned in the mid-1970s (1973 being the year in which income inequality in the United States was at its historically lowest point). Today the multiplier lies around 400. Similarly, the income of the top 1 percent (or even more striking, the top 0.1 percent) of the U.S. population has skyrocketed in relation to that of the remaining 99 percent, bringing income inequality back to levels not seen since the Roaring Twenties. (Arvidsson et. al. 2013, 1-2)

The problem is not, or at least not only, that such income discrepancies exist, but that there is no way to legitimate them. At present there is no way to rationally explain why a corporate CEO (or a top-level investment banker or any other member of the 1 percent) should be worth 400 times as much as the rest of us. And consequently there is no way to legitimately appeal to solidarity or to rationally argue that a factory worker (or any of us in the 99 percent) should take a pay cut in the name of a system that permits such discrepancies in wealth. What we have is a value crisis. There are huge differentials in the monetary rewards that individuals receive, but there is no way in which those differentials can be explained and legitimated in terms of any common understanding of how such monetary rewards should be determined. There is no common understanding of value to back up the prices that markets assign, to put it in simple terms. (We will discuss the thorny relation between the concepts of “value” and “price” along with the role of markets farther on in this chapter.) (Arvidsson et. al. 2013, 2)

This value crisis concerns more than the distribution of income and private wealth. It is also difficult to rationalize how asset prices are set. In the wake of the 2008 financial crisis a steady stream of books, articles, and documentaries has highlighted the irrational practices, sometimes bordering on the fraudulent, by means of which mortgage-backed securities were revalued from junk to investment grade, credit default swaps were emitted without adequate underlying assets, and the big actors of Wall Street colluded with each other and with political actors to protect against transparency and rational scrutiny and in the end to have the taxpayers foot the bill. Neither was this irrationality just a temporary expression of a period of exceptional “irrational exuberance”; rather, irrationality has become a systemic feature of the financial system. As Amar Bidhé argues, the reliance on mathematical formulas embodied in computerized calculating devices at all levels of the financial system has meant that the setting of values on financial markets has been rendered ever more disconnected from judgments that can be rationally reconstructed and argued through.5 Instead, decisions that range from whether to grant a mortgage to an individual, to how to make split-second investment decisions on stock and currency markets, to how to grade or rate the performance of a company or even a nation have been automated, relegated to the discretion of computers and algorithms. While there is nothing wrong with computers and algorithms per se, the problem is that the complexity of these devices has rendered the underlying methods of calculation and their assumptions incomprehensible and opaque even to the people who use them on a daily basis (and imagine the rest of us!). To cite Richard Sennett’s interviews with the back-office Wall Street technicians who actually develop such algorithms: (Arvidsson et. al. 2013, 2-3)

“I asked him to outline the algo [algorithm] for me,” one junior accountant remarked about her derivatives-trading Porsche driving superior, “and he couldn’t, he just took it on faith.” “Most kids have computer skills in their genes … but just up to a point … when you try to show them how to generate the numbers they see on screen, they get impatient, they just want the numbers and leave where these came from to the main-frame.” (Arvidsson et. al. 2013, 3)

The problem here is not ignorance alone, but that the makeup of the algorithms and automated trading devices that execute the majority of trades on financial markets today (about 70 percent are executed by “bots,” or automatic trading agents), is considered a purely technical question, beyond rational discussion, judgment, and scrutiny. Actors tend to take the numbers on faith without knowing, or perhaps even bothering about, where they came from. Consequently these devices can often contain flawed assumptions that, never scrutinized, remain accepted as almost natural “facts.” During the dot-com boom, for example, Internet analysts valued dot-coms by looking at a multiplier of visitors to the dot-com’s Web site without considering how these numbers translated into monetary revenues; during the pre-2008 boom investors assigned the same default risks to subprime mortgages, or mortgages taken out by people who were highly likely to default, as they did to ordinary mortgages.8 And there are few ways in which the nature of such assumptions, flawed or not, can be discussed, scrutinized, or even questioned. Worse, there are few ways of even knowing what those assumptions are. The assumptions that stand behind the important practice of brand valuation are generally secret. Consequently, there is no way of explaining how or discussing why valuations of the same brand by different brand-valuation companies can differ as much as 450 percent. A similar argument can be applied to Fitch, Moody’s, Standard & Poor, and other ratings agencies that are acquiring political importance in determining the economic prospects of nations like Italy and France. (Arvidsson et. al. 2013, 3)

This irrationality goes even deeper than financial markets. Investments in corporate social responsibility are increasing massively, both in the West and in Asia, as companies claim to want to go beyond profits to make a genuine contribution to society. But even though there is a growing body of academic literature indicating that a good reputation for social responsibility is beneficial for corporate performance in a wide variety of ways—from financial outcomes to ease in generating customer loyalty and attracting talented employees—there is no way of determining exactly how beneficial these investments are and, consequently, how many resources should be allocated to them. Indeed, perhaps it would be better to simply tax corporations and let the state or some other actor distribute the resources to some “responsible” causes. The fact that we have no way of knowing leads to a number of irrationalities. Sometimes companies invest more money in communicating their efforts at “being good” than they do in actually promoting socially responsible causes. (In 2001, for example, the tobacco company Philip Morris spent $75 million on what it defined as “good deeds” and then spent $100 million telling the public about those good deeds.) At other times such efforts can be downright contradictory, for example when tobacco companies sponsor antismoking campaigns aimed at young people in countries like Malaysia while at the same time targeting most of their ad spending to the very same segment. Other companies make genuine efforts to behave responsibly, but those efforts reflect poorly on their reputation. Apple, for example, has done close to nothing in promoting corporate responsibility, and has a consistently poor record when it comes to labor conditions among its Chinese subcontractors (like Foxconn). Yet the company benefits from a powerful brand that is to no small degree premised on the fact that consumers perceive it to be somehow more benign than Microsoft, which actually does devote considerable resources to good causes (or at least the Bill and Melinda Gates Foundation does so). (Arvidsson et. al. 2013, 3-4)

Similar irrationalities exist throughout the contemporary economy, ranging from how to measure productivity and determine rewards for knowledge workers to how to arrive at a realistic estimate of value for a number of “intangible” assets, from creativity and capacity for innovation to brand. (We will come back to these questions below as well as in the chapters that follow.) Throughout the contemporary economy, from the heights of finance down to the concrete realities of everyday work, particularly in knowledge work, great insecurities arise with regard to what things are actually worth and the extent to which the prices assigned to them actually reflect their value. (Indeed, in academic managerial thought, the very concept of “value” is presently without any clear definition; it means widely different things in different contexts.) (Arvidsson et. al. 2013, 4)

But this is not merely an accounting problem. The very question of how you determine worth, and consequently what value is, has been rendered problematic by the proliferation of a number of value criteria (or “orders of worth,” to use sociologist David Stark’s term) that are poorly reflected in established economic models. A growing number of people value the ethical impact of consumer goods. But there are no clear ways of determining the relative value of different forms of “ethical impact,” nor even a clear definition of what “ethical impact” means. Therefore there is no way of determining whether it is actually more socially useful or desirable for a company to invest in these pursuits than to concentrate on getting basic goods to consumers as cheaply and conveniently as possible. Consequently, ethical consumerism, while a growing reality, tends to be more efficient at addressing the existential concerns of wealthy consumers than at systematically addressing issues like poverty or empowerment. Similarly, more and more people understand the necessity for more sustainable forms of development. And while the definition of “sustainability” is clearer than that of “ethics,” there are no coherent ways of making concerns for sustainability count in practices of asset valuation (although some efforts have been made in that direction, which we will discuss) or of rationally determining the trade-off between efforts toward sustainability and standard economic pursuits. Thus the new values that are acquiring a stronger presence in our society—popular demand for a more sustainable economy and a more just and equal global society—have only very weak and unreliable ways of influencing the actual conduct of corporations and other important economic actors, and can affect economic decisions in only a tenuous way. More generally, we have no way of arriving at what orders of worth “count” in general and how much, and even if we were able to make such decisions, we have no channels by means of which to effect the setting of economic values. So the value crisis is not only economic; it is also ethical and political. (Arvidsson et. al. 2013, 4-5, emphasis added)

It is ethical in the sense that the relative value of the different orders of worth that are emerging in contemporary society (economic prosperity, “ethical conduct,” “social responsibility,” sustainability, global justice and empowerment) is simply indeterminable. As a consequence, ethics becomes a matter of personal choice and “standpoint” and the ethical perspectives of different individuals become incommensurate with one another. Ethics degenerates into “postmodern” relativism. (Arvidsson et. al. 2013, 5, emphasis added)

It is political because since we have no way of rationally arriving at what orders of worth we should privilege and how much, we have no common cause in the name of which we could legitimately appeal to people or companies (or force them) to do what they otherwise might not want to do. (The emphasis here is on legitimately; of course people are asked and forced to do things all the time, but if they inquire as to why, it becomes very difficult to say what should motivate them.) In the absence of legitimacy, politics is reduced to either more or less corrupt bargaining between particular interest groups or the naked exercise of raw power. In either case there can be no raison d’état. In such a context, appeals to solidarity, like that of the Monti government in Italy, remain impossible. (Arvidsson et. al. 2013, 5-6)

There have of course always been debates and conflicts, often violent, around what the common good should be. The point is that today we do not even have a language, or less metaphorically, a method for conducting such debates. (Modern ethical debates are interminable, as philosopher Alasdair MacIntyre wrote in the late 1970s.) This is what we mean by a value crisis. Not that there might be disagreement on how to value social responsibility or sustainability in relation to economic growth, or how much a CEO should be paid in relation to a worker, but that there is no common method to resolve such issues, or even to define specifically what they are about. We have no common “value regime,” no common understanding of what the values are and how to make evaluative decisions, even contested and conflict-ridden ones. (Arvidsson et. al. 2013, 6)

This has not always been the case. Industrial society—that old model that we still remember as the textbook example of how economics and social systems are supposed to work—was built around a common way of connecting economic value creation to overall social values, an imaginary social contract. In this arrangement, business would generate economic growth, which would be distributed by the welfare state in such a way that it contributed to the well-being of everyone. And even though there were intense conflicts about how this contract should apply, everyone agreed on its basic values. More importantly, these basic values were institutionalized in a wide range of practices and devices, from accounting methods to procedures of policy decisions to methods for calculating the financial value of companies and assets. Again, this did not mean that there was no conflict or discussion, but it did mean that there was a common ground on which such conflict and discussion could be acted out. There was a common value regime. (Arvidsson et. al. 2013, 6)

We are not arguing for a comeback of the value regime of industrial society. That would be impossible, and probably undesirable even if it were possible. However, neither do we accept the “postmodernist” argument (less popular now, perhaps, than it was two decades go) that the end of values (and of ethics or even politics) would be somehow liberating and emancipatory. Instead we argue that the foundations for a different kind of value regime—an ethical economy—are actually emerging as we speak. (Arvidsson et. al. 2013, 6)

Crystal Balls and Econometrics

The growth of economic knowledge over the past 200 years compares quite favourably with the growth of physical science in any arbitrary 200 year stretch of the dark ages or medieval period. But one is reminded of Mark Twain: “it ain’t what people don’t know that’s the problem; it’s what they know that just ain’t so.” Along with the accumulation of knowledge there has been a proliferation of abstract theorizing that is only too easy to misapply or apply to situations where it is inappropriate. The low power of empirical tests and indifference of too many people to empirical testing has allowed useless models to persist too. Ideology also plays a bigger part than it does in most sciences, especially in macroeconomics. So it is easy to point to cases where economists offered terrible advice. No reason to despair. Smith, Marx, Keynes, Kalecki, Simon and Minsky all advanced understanding somewhat while Marshall, Hicks and others clarified and formalized concepts. Macroeconomics took a wrong path and a sharp turn for the worse in the1970s and we are barely emerging now. Still, what is 50 years in the eye of history?

— Gerald Holtham on RWER Blog

The modern forecasting field, which emerged in the early twentieth century, had many points of origin in the previous century: in the field credit rating agencies, in the financial press, and in the blossoming fields of science—including meteorology, thermodynamics, and physics. The possibilities of scientific discovery and invention generated unbounded optimism among Victorian-era Americans. Scientific discoveries of all sorts, from the invention of the internal combustion engine to the insights of Darwin and Freud, seemed to promise a new and illuminating age just out of reach. (Friedman 2014, ix)

But forecasting also had deeper roots in the inherent wish of human beings to find certainty in life by knowing the future: What will I be when I grow up? Where will I live? What kind of work will I do? Will it be fulfilling? Will I marry? What will happen to my parents and other family members? To my country, to my job? To the economy in which I live? Forecasting addresses not just business issues but the deep-seated human wish to divine the future. It is the story of the near universal compulsion to avoid ambiguity and doubt and the refusal of the realities of life to satisfy that impulse. (Friedman 2014, ix)

Economic forecasting arose when it did because while the effort to introduce rationality—in the form of the scientific method—was emerging, the insatiable human longing for predictability persisted in the industrializing economy. Indeed, the early twentieth century saw a curious enlistment of science in a range of efforts to temper the uncertainty of the future. Reform movements, including good, bad, and ugly ones (like labor laws, Prohibition, and eugenics), envisioned a future improved through the application of science. So, too, forecasting attracted a spectrum of visionaries. Here were “seers,” such as the popular prophet Roger Babson, Wall Street entrepreneurs, like John Moody, and genuine academic scientists, such as Irving Fisher of Yale and Charles Jesse Bullock and Warren Persons of Harvard. (Friedman 2014, ix)

Customers of the new forecasting services often took these statistics-based predictions on faith. They wanted forecasts, John Moody noted, not discourses on the methods that produced them. Readers did not seek out detailed information on the accuracy of economic predictions, as long as forecasters proved to be right at least a portion of the time. The desire for any information that would illuminate the future was overwhelming, and subscribers to forecasting newsletters were willing to suspend reasoned judgment to gain comfort. This blend of rationality and anxiety, measurement and intuition, optimism and fear is the broad frame of the story and, not incidentally, why forecasters who were repeatedly proved mistaken, as all ultimately must be given enough time, still commanded attention and fee-paying clients. (Friedman 2014, x)

(….) Forecaster’s reliance on science and statistics as methods for accessing the future aligns their story with conventional narratives of modernity. The German sociologist Max Weber, for instance, argued that a key component of the modern worldview was a marked “disenchantment of the world,” as scientific rationality displaced older, magical, and “irrational” ways of understanding. Indeed, the forecasters … certainly saw themselves as systematic empiricists and logicians who promised to rescue the science of prediction from quacks and psychics. They sought, in the words of historian Jackson Lears, to “stabilize the sorcery of the market.” (Friedman 2014, 5)

The relationship between the forecasting industry and modernity was an ambivalent one, though. On the one hand, the early forecasters helped build key institutions (including Moody’s Investors Service and the National Bureau of Economic Research) and popularize new statistical tools, like leading indicators and indexes of industrial production. On the other hand, though all forecasters dressed their predictions in the garb of rationality (with graphs, numbers, and equations), their predictive accuracy was no more certain than a crystal ball. Moreover, despite efforts of forecasters to distance themselves from astrologers and popular conjurers, the emergence of scientific forecasting went hand in hand with rising popular interest in all manner of prediction. The general public, anxious for insights into an uncertain future, consumed forecasts indiscriminately. (Friedman 2014, 5)