economy – William Dare

Thoughts: Novelty, Education, Society, Theory

I could write for days on end with all that’s been on my mind. But I guess I’ll just dump some random thoughts circulating about at the moment. I apologize if my line of thought appears a bit erratic and nonlinear.

Recent research regarding the genetic basis for novelty seeking behaviors in honey bees parallels that of humans. ADHD is characterized as a novelty seeking behavior, one that thrives off of new stimulation, hence the title Attention Deficit Hyperactivity Disorder. These genes are hardwired to the benefit of the group to seek new enterprises, to explore and discover new directions for growth.

Society is a historical phenomenon, a developmental product of inherited traditions to preserve functional behavioral aspects for survival. Pure theory disregards the empirical element to any social science. The biggest culprit in perpetuating opaque theories in the social sciences is Economics.

I will state that pure theory of any kind breeds a certain phenomenon of necessity by reducing evolving organic elements into statical-atomistic parts, consequently quelling any perspective that accommodates for change. Theory requires assigned values in order to quantify and logically justify its conclusions. Indoctrination is the method that achieves this end.

So long as economics is a practical exercise whose applications deal with and affect the organism of society, it should have no business perpetuating pure theory over historical-empirical observations, which is science. Psuedo-science is pure theory. Recall the utility of metaphysical speculations rooted in pure machinations melded from minds rooted in supernatural causation, totally detached from the socio-material world. Perspective, or rather the amalgam of perspective, is paramount to achieving accurate explanations. Think on the process of peer review.

Necessity breeds slavery, i.e. denies man. The phonomenon of Necessity is a testament, not to its excellence, but its power [sic Ellul]. Necessity is convergent. Possibility is divergent, as is potentiality. Equilibrium is convergent. Evolution is divergent. Preservation is convergent. Adaptation is divergent.

A college degree, and contemporary formal education, is tantamount to receiving confirmation through the Christian church. I reject the value of indoctrination in both.

Have we witnessed a surge towards the value of divergent thinking or convergent? Does our education system reflect valuations of standardization or differentiation? Has standardized testing, formality, rigid class structure increased or decreased? What is our fate?

You cannot stand within and move without: escape bias by escaping context. Transcend perspective by losing it.

That I know myself to be a common man makes me uncommon. Recall the maxim of Thales: “Know thyself.” Recall the wisest tenant of Socrates: “As for me, all I know is that I know nothing, for when I don’t know what justice is, I’ll hardly know whether it is a kind of virtue or not, or whether a person who has it is happy or unhappy.”

Many know the words, few know the meaning. For that we can praise propaganda’s subversive process of inculcation perpetuated by the forceful effect of formal education: memorization, recitation, regurgitation, repeat. Where is Comprehension? Where is dialog? Propaganda ceases where dialog begins.

Economics is a social science. Society is a historical phenomenon. History is an empirical development. Why are we perpetuating pure theory over empirical practice? Let us cultivate the value of individual consciousness, each man’s theory of mind, and marry it with the prevailing practices to yield a praxis of reflection and action that prizes the individual’s contribution to the well being of the social context in which he is situated. To deny the value of a single perspective is to sabotage evolution’s law of accounting for every variable to render a more perfect adaptability.

Where you look determines what you see. Look farther, look wider, look deeper.

“Men must talk about themselves until they know themselves.” Journal reflections. Engage in dialogue. Objectify the subjective; discover its fruits and failings. Dialogue, so long as it is an honest portrayal of your current convictions, destroys propaganda, dispels ignorance, and produces a finer eye with which to feed the mind.

Recent science has reaffirmed the powers of LSD as a means of disrupting habits of thought. This bodes well for the prospect of freeing the mind of man, i.e. addiction, but poorly for a politik aiming to strengthen its control through conformity.

Mental diseases, as diagnosed by contemporary medical criteria, and most notably depression, bipolar, and anxiety, have been associated with great genius and leadership in every domain of society. Contrary to popular belief, recent science has discovered that depression is due to a hyper activity in the brain that leads to potential paralyzation of thought, hence the symptoms of rumination, chronic worry, listlessness and the like.

ADHD is also characterized by hyperactive brain activity. Individuals with ADHD are in upwards of 2.7 times more likely to simultaneously have depression (Other notable correlations include bipolar disorder, anxiety, and oppositional defiance disorder. See here, here, here, here, here, and here)

Individuals with mild depression, as opposed to those with major depression, are more skeptical and therefore rational than those without the diagnoses. (Listen to this presentation on Optimism Bias)

I posit that the same reason people retain a optimism bias, despite being confronted with contradictory facts, is the same reason people exist in a state of denial. (See here)

“[Michael Shermer’s] latest book, ‘The Believing Brain’, is a fascinating synthesis of 30 years of research on the subject. Shermer’s conclusion, about our belief-forming machinery, is disturbing. Most beliefs are not formed by carefully evaluating the evidence in favor or against a particular claim. Instead, they are snap decisions made for psychological, emotional and social reasons in the context of an environment created by family, friends, colleagues, culture and society at large. Only after the belief is formed, do people try to rationalize it and subconsciously seek out confirmatory evidence which, upon finding, reinforces the belief in a positive feedback loop.”

I can appreciate the evolutionary utility of bias as a means of maintaining inherited beliefs and preserving the status quo, but one needs to dwell on the implications of how this bias can be exploited, specifically by propaganda.

That leads me to another issue that I’ve been giving plenty of thought: the social construction of reality. What got me started thinking on this topic was my development economics course (which I despise due to the highfalutin exaggerations regarding its ability to actually explain economic development). The only piece of information I found valuable at all was the only piece of information it absolvedly claimed to be the single dictator for a society’s developmental economic success: institutions. This struck me as acutely profound, and odd since it was a mere footnote amongst an oceanic backdrop of theoretical constructions and descriptive statistics.

Since then I began to explore the weight of this idea that institutions are the sole determinate of economic development and success. I began asking myself ‘What are these institutions?’, ‘Why are they so important for economic development?’, ‘What makes one institution better than another?’, ‘How are these institutions created and sustained?’, and many others.

Because of this prick to my curiosity, and because of a massive paper I’m developing for a Macroeconomic policy class, I picked up my old History of Economic Thought book and reread about fifty percent of it, trying to uncover a scintilla of insight into what the history of economic thought may have said about this idea of institutions, and I was more than rewarded for these efforts. In addition to accruing a renewed interest in classical economists such as Smith, Malthus and Ricardo, my eyes were once again opened to the oft-misinterpreted and misaligned message of Marx, and futhermore I discovered just the veins of thought that satisfied by curiosities most exactly: Historical Economics and Institutional Economics. Wow.

Due to my interest in evolutionary economics and political economy I previously read books by Galbraith, Schumpeter, Marshall, Boulding and others but I was totally ignorant to the extent at which these involved socio-economics, specifically institutional economics. Moreover, meta-connections between economics, politics, sociology, psychology, anthropology, history, and evolution were made abundantly clear.

My philosophically minded interest in gaining traction in these seemingly disparately domains to gain a broader, fuller, and more comprehensive understanding of the world in which I am situated lead me to my original fascination with power, which I gratuitously thank Nietzsche, Schopenhauer, and Thucydides for instilling within me. Specifically, power as the mechanism for all change: be it in the reality of the natural world or in the phenomenon of the conscious mind. The impetus of power occupies the seat governing change in every domain, from physics and math, to politics and business, and all the cultural manifestations in between, from science to religion. The force and intensity of power can be traced to both intentional and accidental confluences.

At the time I had this revelation in the power of institutions, I just so happened to be reading Veblen Thorstein’s The Theory of the Leisure Class. I picked up his book due to my growing fascination with domestic and current account imbalances (debt) and the wealth disparities they create. Thorstein Veblen just so happened to be not only an economist and sociologists, but one of the original proponents of institutional economics.

Other factors that influenced this fascination was my study of Greek civilization. Being a professed model for American Democracy, I felt compelled to investigate the various factors involved in the production of Greek culture. Greek religion appeared as a marvelous area of study due to my corrected ignorance of its role in shaping the nomos or conventions governing social affairs, rather than solely providing a metaphysical comfort like modern Christianity seeks to accomplish.

In addition, I coincidentally read Peter Berger’s The Sacred Canopy: Elements of a Sociological Theory of Religion for a humanities class in Crisis and Creativity. This sealed the connection between the role of institutions in shaping mass culture and individual psychology.

From here I began studying sociology more intensely.

I’m nearly finished reading Berger and Luckmann’s seminal work, The Social Construction of Reality, on the formation of social knowledge, which they declare dictates our conception of reality more generally. It’s a fascinating read that I recommend everyone pick up. I don’t have time to elaborate on my revelations, insights and comments at the moment. Another time.

Berger’s reading elevated by insight into the mechanisms that create the social consciousness and the social knowledge that accompanies it. As a result of that reading I also began looking into the various apparatuses within society that perpetuate social knowledge. I purchased the book Propaganda: The Formation of Men’s Attitudes by Ellul and this has further reinforced by understanding of the mechanisms driving social behavior.

An interesting, but not surprising, study reveals that “Large numbers of authors of DSM psychiatry ‘bible’ have ties to the drugs industry.” (See here) This reaffirms my conviction that psychiatry is a purely cultural phenomenon. And culture, as I have mentioned, is a product proportional to the authority and power bestowed by institutions within society. While the American Psychiatric Association (APA) is a large institution with vested authority, it is dwarfed in power by the profit motives of the Pharmaceutical industry.

And what dictates the extent of profit motives for big pharma? My thoughts turn immediately to the legal and political realm governed by lawmakers in congress as well as the upholders of that law in the judicial branch and the enforcers in the executive branch.

What motivates these political individuals? The preservation of their power or, at the very least and being most charitable, the preservation of the power of their ideas about the way things ought to be, specifically their values, which are at base purely subjective constructs that reflect a means of preserving their ego.

I could go on but I have other work to due.

Last thoughts. I’m looking forward to reading Thucydides’ The History of the Peloponnesian War as well as Althusser’s Philosophy, Lenin, and other essays. I need to finish reading Das Capital by Marx, something I began reading with great enthusiasm a month or two ago but got distracted with all these new insights.

Other author’s also on my reading list are Max Weber, Kahneman and Tversky, Mitchell Waldrop, Alfred Schutz, Karl Mannheim, Alfred Weber, Max Scheler, Colin Camerer, and Tacitus.

I’ll dump more thoughts later.

Draft: Cultural Landscape and Innovation

I just finished reading a NYT article titled True Innovation that discussed the trajectory of innovative trends within our culture. It prompted me to think about Paul Feyerabend, Thomas Kuhn, and Imre Lakatos’ philosophy of science, Nietzsche’s prophetic will to power and the thematic elucidations of Panagiotis Kondylis.

They say necessity is the mother of invention? What kind of necessity? Personal necessity for psychological equilibrium? Necessity for physiological equilibrium? Social necessity for conformity and adoption?

Logic is equilibrium: each new theory comprising a paradigm comes with statical axioms that present endless combinations of puzzles for solving. These puzzles allow us to work out discrepancies between axioms so that theories can be reconciled and smoothed out. Progress takes place linearly rather than horizontally. When novel theories are introduced that clash with present conventional logic and historical science, they are most often brushed aside or discarded. In time this giant system of science, these puzzle solving enterprises, run out of combinations. Reality is perceived to be consistent with the facts. This hubris indicates the beginning of the end. Thinkers, being so enculturated and inundated with the present paradigm, totally preoccupied with pursuing universal truths, fail to account for individual experience in the process. As a result, change occurs unnoticed. First, small subtle and incremental changes, and these are only felt at the periphery of society. But these fractional degrees of change compound across a society losing touch with itself and soon reality becomes a vicarious fiction of role playing, where types and genres and paths provide navigation, where our thoughts are purchased and our ideas reflect consensus, where individualism is a cruel catch phrase.

The corollary is a culture who have grown efficient at perpetuating more of the same, more of the good and, in turn, much more of the bad. You must remember that every experience is unique, that what was good for today may not be good for tomorrow. Weather is the harbinger of change and climates never stays favorable for long, be it cultural or geological.

Institutions are good and bad: must be adaptive. Freedom is necessary. Time must be plenty. Purpose is paramount. The collaboration of collective disparate experiences, but similar values, is necessary for creation.Vision provides direction. Autonomy to explore along the way. Intrinsic motivation towards understanding will always triumph over extrinsic motives for profit. Plenty of resources.

Revolutions happen fast but dawn slowly. To a large extent, we’re still benefiting from risks that were taken, and research that was financed, more than a half century ago. -Jon Gertner, True Innovation

Think Thomas Kuhn.

More later

QUOTED passages of interest:

In his recent letter to potential shareholders of Facebook, Mark Zuckerberg noted that one of his firm’s mottoes was “move fast and break things.” Bell Labs’ might just as well have been “move deliberately and build things.” This sounds like the quaint pursuit of men who carried around slide rules and went to bed by 10 o’clock. But it was not.

fundamental belief was that an “institute of creative technology” like his own needed a “critical mass” of talented people to foster a busy exchange of ideas. But innovation required much more than that. Mr. Kelly was convinced that physical proximity was everything; phone calls alone wouldn’t do. Quite intentionally, Bell Labs housed thinkers and doers under one roof. Purposefully mixed together on the transistor project were physicists, metallurgists and electrical engineers; side by side were specialists in theory, experimentation and manufacturing. Like an able concert hall conductor, he sought a harmony, and sometimes a tension, between scientific disciplines; between researchers and developers; and between soloists and groups.

Another element of the approach was aspirational. Bell Labs was sometimes caricatured as an ivory tower. But it is more aptly described as an ivory tower with a factory downstairs. It was clear to the researchers and engineers there that the ultimate aim of their organization was to transform new knowledge into new things.

Mr. Kelly believed that freedom was crucial, especially in research. Some of his scientists had so much autonomy that he was mostly unaware of their progress until years after he authorized their work. When he set up the team of researchers to work on what became the transistor, for instance, more than two years passed before the invention occurred. Afterward, when he set up another team to handle the invention’s mass manufacture, he dropped the assignment into the lap of an engineer and instructed him to come up with a plan. He told the engineer he was going to Europe in the meantime.

THERE was another element necessary to Mervin Kelly’s innovation strategy, an element as crucial, or more crucial even, than all the others. Mr. Kelly talked fast and walked fast; he ran up and down staircases. But he gave his researchers not only freedom but also time. Lots of time — years to pursue what they felt was essential. One might see this as impossible in today’s faster, more competitive world. Or one might contend it is irrelevant because Bell Labs (unlike today’s technology companies) had the luxury of serving a parent organization that had a large and dependable income ensured by its monopoly status. Nobody had to meet benchmarks to help with quarterly earnings; nobody had to rush a product to market before the competition did.

But what should our pursuit of innovation actually accomplish? By one definition, innovation is an important new product or process, deployed on a large scale and having a significant impact on society and the economy, that can do a job (as Mr. Kelly once put it) “better, or cheaper, or both.” Regrettably, we now use the term to describe almost anything. It can describe a smartphone app or a social media tool; or it can describe the transistor or the blueprint for a cellphone system. The differences are immense. One type of innovation creates a handful of jobs and modest revenues; another, the type Mr. Kelly and his colleagues at Bell Labs repeatedly sought, creates millions of jobs and a long-lasting platform for society’s wealth and well-being

The conflation of these different kinds of innovations seems to be leading us toward a belief that small groups of profit-seeking entrepreneurs turning out innovative consumer products are as effective as our innovative forebears. History does not support this belief. The teams at Bell Labs that invented the laser, transistor and solar cell were not seeking profits. They were seeking understanding. Yet in the process they created not only new products but entirely new — and lucrative — industries.

But to consider the legacy of Bell Labs is to see that we should not mistake small technological steps for huge technological leaps. It also shows us that to always “move fast and break things,” as Facebook is apparently doing, or to constantly pursue “a gospel of speed” (as Google has described its philosophy) is not the only way to get where we are going. Perhaps it is not even the best way. Revolutions happen fast but dawn slowly. To a large extent, we’re still benefiting from risks that were taken, and research that was financed, more than a half century ago.

Will Technology Save Us All, or Will It Tear Us Apart?

See:

COMING SOON: ‘Teaching & Learning Guide for ‘Can a Knowledge Sanctuary also be an Economic Engine? The Marketing of Higher Education as Institutional Boundary Work’’ by Prof. Steve Hoffman (University at Buffalo, SUNY) – PROVISIONAL ABSTRACT: The marketing of higher education refers to a structural trend towards the adoption of market-oriented practices by colleges and universities. These organizational practices blur the boundary between knowledge-driven and profit-driven institutions, and create tensions and contradictions among the three missions of the 21st-century university: knowledge production, student learning, and satisfying the social charter. In this article, we highlight the historical contexts that nurtured the marketing of higher education in the U.S. and Europe and explore the dilemmas that arise when market logics and business-oriented practices contradict traditional academic values. We demonstrate that managing these dilemmas is a contested process of policing borders as institutional actors struggle to delineate the proper role of the university in a shifting organizational climate.

Evolutionary Economics: Organic Analysis of Economic Growth

Abstract: This essay explores whether it is possible or desirable for present-day economic theory to incorporate biological or evolutionary insights of the type suggested by Alfred Marshall but not fully embraced by him.

If the study of economics is to function as a progressive system that guides and explains the behaviors of men as free and creative agents, it is necessary to examine the study in an open and dynamic way that emphasizes the growth of knowledge and qualitative factors as the prevailing force of change and progress. Early on Marshall (2009) discovered the inherent error with rational mechanistic economic systems when he said “economics, like biology, deals with matter, of which the inner nature and constitution, as well as the outer form, are constantly changing” (p. 637). Whether Marshall knew it or not, the problem between statical and biological theories is fundamentally a philosophical one. This essay will explore this problem, delineate its philosophical roots, and build a case in favor of evolutionary economics.

The central thesis of this essay argues that neoclassical economic models operate in the outdated modernist paradigm that utilize rational closed systems which are, as a result, authoritarian and unsustainable with respects to free market innovation and evolution. The argument presented here is that economic models need to shift away from quantitative measures emphasizing ideal equilibrium states and towards a post-modern conception that accounts for freedom and change. In this way economics will reflect nature accurately, i.e. men are individual and free agents acting interdependently within an evolving economic landscape. This will provide holistic and sustainable model for interpreting progress by individuating agents according to inevitable qualitative changes within an economic system.

Continue reading “Evolutionary Economics: Organic Analysis of Economic Growth”

Schumpeter and Creative Destruction: The Process of Market Innovation in Capitalist Societies

Schumpeter and Creative Destruction:
The Process of Market Innovation in Capitalist Societies

Joseph Schumpeter was a 20th century Austrian economist who taught at Harvard for several years upon coming to the US. While much of his work was overshadowed by his contemporary Keynes, he made important contributions to macroeconomic theory by developing dynamic models of market change. His work described the nature of market innovation within capitalist societies and emphasized the role of less quantitative measures such as sociology as a major factor for economic development. Much of his inspiration was drawn from the economists Marx and Weber who favored dynamic sociological backgrounds, as well as Walrus from whom he borrowed the concept of the entrepreneur. Despite his emphasis on social factors, however, Schumpeter was one of the leading econometric economists of his day.

In 1942 Schumpeter published Capitalism, Socialism, and Democracy. In this work lies the theory of creative destruction, one of his most notable contributions. Originally a term coined by Marx, Schumpeter employed the “creative destruction” to mean the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one”. He wrote that the concerns of capitalism were less about how existing structures were administered and maintained and more about how these structures are destroyed and created. Entrepreneurs, he says, are the sole facilitators of innovation and invention that bring about these structural and market changes in economic systems.

Schumpeter placed much focus on equilibrium and the role of entrepreneurs to facilitate change within an economy. According to Schumpeter, an economy in equilibrium produces products for future consumers who are consuming their present products, and consumers consume products of past producers in a circular flow based on past experience. The expectations and cycles are essentially contained with no new production functions allowing for changes. The entrepreneur operates outside the system and introduces changes to the production function that allow for the creation of new wealth and destruction of the old- hence the term, creative destruction.

In Schumpeter’s analysis, entrepreneurs are the sole agents of change and responsible for the destruction and construction of new markets and wealth within a society. It is the sheer acts of will and leadership, rather than intellect, which characterize the entrepreneur and secure economic progress through successful innovation.

According to Schumpeter, capitalist societies did not operate in a the static circular flow, or equilibrium, proposed by Weber where the production function is invariant and preexisting factors of production are combined according to the technology at hand mechanically. Market activity is much more dynamic and changing. It is the Entrepreneurs who operate as a nonentity outside of this equilibrium and force new combinations of factors that disturb the circular flow as a means of innovative development. Rather than changing the quantity of factors to change the quantity of products produced, this disturbance creates market disequilibrium as their innovative contributions change the form of the production function. This change in production function form introduces new and higher quality commodities which destroys old wealth and creates new wealth.