Whichever side of the argument you might be on, it’s worth looking at a very cogent and entertaining video talk by the late Professor G.A Cohen on some of the problems of ‘actually existing capitalism’.  I found it while following up a reading of his Tanner Lecture, ‘Incentives, Inequality, and Community’, given at Stanford University in 1990-91, which contains a powerful argument against incentive justifications for income/wealth inequality.

The talk was evidently broadcast on the UK Channel 4 some time in the 1980s. You can find the video here at ‘Sociological Images.

Future Economics - People, Money and Power

Wall Street, NYC

What is economics for? It’s often characterised as being about the choice between ‘guns or butter’. This choice is one not only about which we want to consume, but also about which we want to produce. Strangely, the dominant neoclassical paradigm attempts to render this a choice that need not be made, since it proposes the possibility of an entirely voluntary and stable production and trading outcome (equilibrium) that cannot be bettered. Or at least it cannot be bettered in the sense that no change is possible without making somebody worse off.

This process was described by the ‘father’ of modern economics Adam Smith as being an ‘invisible hand’ that brought about the welfare of all through the self-interest of traders, and that this is possible with markets and a set of prices for goods has been proven mathematically. It forms the basis of an approach to economics that starts from the position that in the absence of identifiable forces shifting things in the other direction, the economy will tend toward the ‘equilibrium’ outcome. In the apparent absence of a way of establishing the relative merits of individuals’ claims against each other this outcome is the best we can or should aim for, and so provides a justification for doing everything we can to remove any forces that might prevent this equilibrium being reached and maintained. These forces include lack of access to well-functioning markets for all sorts of goods, services and assets; lack of a reliable medium of exchange (money) to make trading more efficient; and lack of a system of law that can deal with the disputes in trade that must inevitable arise. Dealing with these barriers to trade is fairly neutral in its effects – favouring (at least in principle) neither those that start off wealthy, nor those that start off poor. But then things become more tricky. Markets need strong rights of private property – since you cannot easily sell what is not certainly yours, and there is not much point in buying what you cannot hold on to – but as soon as such law is enacted and enforced it must inevitably freeze in position the status of the current patterns of wealth however they were achieved. The interference of governments and other bodies, whether as regulators or players in the market and whatever their legitimacy on other grounds such as democratic processes, is generally to be avoided, discouraged and diminished.

It is unsurprising that a system that regards pre-existing wealth as having arisen by voluntary agreement and enshrines its protection in law should be one that has a particular attraction to those individuals that are already wealthy, and whose benefits might be overstated by them. This overstatement takes the form of accepting the market outcome as the default position – to be only interfered with if the political case (read risk of rioting on the streets) becomes severe enough. In fact there are several reasons to suspect that this is entirely the wrong approach, and that while the right to free exchange of one’s goods and labour is an important and valuable one, it does not trump all others.

To find one’s way to the theoretical riches of the market one needs accurate information about oneself, the interaction of one’s market decisions with those of others and about the future. The supremacy of the market outcome also depends on equality of market access and power in terms of wealth and resources and the ability to trade on my own account any positive or negative ‘good’ that might affect me. Any failure in the first group of assumptions tends to be magnified through any failure in the second. A profit made from a lack or asymmetry of information can be used to consolidate a position in the market that can be used to leverage further profits. Add a leakage of economic power into the political sphere and the theoretical equilibrium becomes a rapidly widening inequality of wealth and power.

Economics and economists are individually often aware of these flaws in the market system, but they have developed a series of ‘tools’ that allow mathematical analysis. Unfortunately, most of these tools simplify equilibrium analysis by removing the real world problems that make true equilibrium unlikely and in any case most unlikely to represent a meaningful peak of welfare. These tools include ‘revealed preference’ – the assumption that actual choices always represent best options; ‘the representative agent’ – a single individual to replace complex social and trading interactions; simplified responses to price changes and assumptions of ‘perfect information’ and perfect knowledge of the future. While many of the models thus constructed are interesting and give insights into particular economic phenomena, they cannot hope in themselves to provide complete answers to the problems of how we should organise our economy or society. In the absence of a feasible welfare-maximising equilibrium, the second-best solution may well NOT be to remove as many barriers to ‘free’ transactions as possible.

Future Economics - People, Money and Power

Princes Street, Edinburgh, at Dusk

I had the chance to see the great economist and social philosopher Professor Amartya Sen at the Edinburgh Book Festival on the 29th of August. I use the word ‘see’ not to imply that I had a personal meeting with him, but because he actually said disappointingly little at the large public event in which he took part.

He only said a few brief words about his new book, ‘The Idea of Justice’, and then the floor was open to questions from the moderator Brian Taylor of BBC Scotland and the audience. I admit that I haven’t read this book, although I regard his previous work ‘Development as Freedom’ as one of the most important I have read. From a review of the book by John Gray it seems however that what Professor Sen did say amounted to a fair summary of the main argument.

His view is that theoretical ideas of justice and the search for ‘ideally just’ institutions are less useful than more focused attacks on the particular injustices that we see around us, and for which it is easier, he claims, to find reasoned agreement on tackling. Indeed he observes that such a concept as ‘global justice’ is impossible without a global state to implement it.

I fear that on this occasion, to seriously mix my metaphors, Professor Sen may have picked on something of a straw man and thrown the baby out with the bath-water. While I think he is absolutely right to say that a reasoned agreement in the light of all available facts is always better than some rule imposed by a theory, I don’t see how agreement can be reached on tackling any injustices without some prior agreement on concepts and interpretation of facts. This agreement is the baby; the straw man is the idea that those holding ‘theoretical’ ideals of justice generally expect them to be the sole drivers of achieving justice.

In his review John Gray, as is his wont, rejects both the power of ideals, and the power of rationality to find agreement on specifics. I believe the realistic, but not pessimistic, view is that we can get so far with some ‘theoretical agreement’, observe the improved outcome and hope this convinces a few more that our ideals have merit and should be taken further. In this way slow but steady progress can indeed be made toward justice.

Future Economics - People, Money and Power

A post of genuine interest (rather than just stimulating of the desire to bash my head against my computer screen) on the Adam Smith Institute blog today. Sara Williams, who normally specialises in extraordinarily one-eyed monetary/macro commentaries, has drawn our attention to a paper by Peter Leeson of George Mason University in Virginia in which he explains the value to the Gypsy community of some very strange superstitions.

Assuming that these superstitions are in fact not true – this raises the general question of the potential value of held beliefs that may or may not be true. In other words their value to the community and/or individual may have nothing to do with their truth value.

I wrote an essay on this particular topic a few years ago. The essay was in response to a competition run by a philosophy magazine – with the stimulus being the choice offered to the character Neo in the film ‘The Matrix’. This choice consisted of two pills, red and blue; one of which would return him to the illusory world with which he was familiar, and the other which would lead him to enter a strange and frightening but real world. I reproduce the essay below. (It didn’t win…too analytic, going by the one that did win!)

The Matrix — Which Pill?

Diarmid J G Weir

Shorn of its cinematic context, the decision facing Neo in ‘The Matrix’ is a choice of futures; return to a familiar illusion with the blue pill or entry to what Morpheus describes as a ‘desert of the real’ irrevocably revealed by the red pill. The relative comfort of the illusion might seem the obvious choice but Neo chooses to know the truth, and takes the red. Is this just foolish bravado or is his decision the right one? Two conditions might make him right. Either Morpheus’ claims for the blue pill are not sustainable, or truth has some intrinsic merit for human beings.

There is more than a dry philosophical debating issue here; the relative merits of truth and illusion have practical relevance. A common dilemma in our lives is to decide how much truth we release to those for whose well-being we are in some way responsible. Health professionals frequently have to consider whether telling someone the full extent of a malignant illness will shorten or make less happy the little time their patient may have left. Parents of adopted children face the decision of when to tell them that they are not after all of their own flesh and blood.

The nature of truth and its value to human beings is a longstanding philosophical problem. There are three main theories of truth, none of which seems entirely satisfactory. The theory of truth most commonly held, by philosophers and non-philosophers alike, is that of correspondence; simply that propositions or beliefs are true because the facts they express or represent are true. But what are facts? If they are no more than ‘true’ statements or propositions then the notion seems a circular one. And if facts are something other than these linguistic constructs, then what are they?

To try to get round these problems the coherence theory was suggested. A proposition is true in so far as it fits in with our other beliefs and does not contradict them. ‘Truths’ exhibit mutual dependence. But when statements contradict each other which is the true one, or are neither true? Do we not need some other criteria of truth?

Pragmatism is the idea that a true belief or proposition is the one that is most useful for us to hold. The truth is ‘what works’. But different beliefs may work for different people. Are all such beliefs equally ‘true’ or do we need some other way of distinguishing between them?

Considering Neo’s dilemma, and ours, in the light of these theories not only helps with the decision but can clarify the value of the theories themselves. The coherence theory seems at first sight the least helpful. If it is true that the blue pill can eliminate any knowledge of the choice after it is made, then presumably the illusory world must appear to be coherent. If this is all there is to truth there seems no advantage over illusion. And if the experience of the illusion is more pleasant there seems no reason not to go for the blue pill. But can an illusion really be coherent?

The pragmatic theory suggests that the truth is what is most useful to us; in effect the belief that will make us happy. Perhaps then the more pleasant world of illusion is really the true one. This idea seems to underlie Cypher’s decision to betray his friends to Agent Smith. ‘Ignorance is bliss’, as he puts it. After all the electrochemical signals reaching our brains are what create our experiences, irrespective of how they got there. Doesn’t blue win again?

Since the common feature of both the coherence and pragmatic theories of truth is that they only relate truth to the individual who perceives it, we should not be surprised at these outcomes. An answer to Neo’s problem requires direct comparison of experiences. Yet if he opts to stay with the illusion Neo will never know the truth; and if he opts to know the truth he can never go back to being held by the illusion. We have to move beyond the individual perspective and consider the relationship between belief and reality rather than that between belief and believer. For this only the correspondence theory seems to fit the bill.

This returns us to the problem we hit before. What is the reality to which the beliefs created by experience correspond to? In the film it is assumed that the beliefs and experience created by the computer-generated world of the Matrix are less real than those which occur once disconnected from it. But how real is the non-Matrix created world? Isn’t the ‘real’ world that we see, feel and hear only a representation of the deeper reality of fundamental particles and electromagnetic forces? Isn’t what we regard as reality already an illusion of sorts? There always seems to be a gap between what we observe and what deeper examination might reveal. So how can we actually distinguish between the ‘real’ 22nd century world and the ‘illusory’ 20th century one of the Matrix?

Fortunately there does seem to be a crucial difference between the relationships of human reality and the reality of fundamental particles on the one hand, and that between human reality and the illusion of the Matrix on the other. The reality of fundamental particles, although not immediately visible to us, is at least continuous across all our experience. In the Matrix, however, the reality of physical human existence – including the brain and its network of communication with others – remains outside the illusion, deliberately separated from it by the machines. The purpose of the Matrix is to deceive; ‘to keep us under control and change us into this’, says Morpheus, as he holds up a battery. The purpose of fundamental reality, as far as it has any, is simply to exist. The physical human brain straddles this discontinuity of intention and so has the opportunity to develop awareness of the Matrix program and eventually to manipulate it. As Morpheus tells Neo, the freed human mind is stronger than intelligence governed by ‘rules and controls, borders and boundaries’. Within the virtual 20th century world this gives Trinity and Morpheus the ability to run superhumanly fast, leap extraordinary distances and move in ways that humans fully under the illusion cannot hope to withstand. Neo himself develops an even greater ability to control his virtual environment. He starts off by dodging bullets and defying gravity and ends up with complete control over the Matrix program itself. In the film this seems symbolised by the way in which Trinity’s love for Neo – existing outside the Matrix – overcomes his death within it. This makes for a good story, and the reasoning has plausibility.

Fatally for Morpheus’ guarantee of ignorance should Neo take the blue pill, the clues to the discontinuity between reality and the Matrix could occur from experiences arising wholly from within the Matrix program. This might occur in at least two ways. The illusory world is contained within the real world; therefore it can encompass fewer possible events than the real world. Eventually two or more different outputs from the human brain will be returned with exactly the same input, despite detailed understanding down to the most basic physical processes. We would ‘know’ that we had done two different things, in contradiction to our senses. Perhaps this is the cause of Neo’s feeling that there is something wrong with the world; the feeling that Morpheus likens to ‘a splinter in the mind’. Another time a point of no further progress across the universe might appear despite an absence of physical limits. A spacecraft will perhaps come to a halt, disappear or reverse direction without any physical explanation, having exceeded the bounds of the Matrix software. The intention to deceive will have been revealed by the existence of this fundamental discontinuity. We will have discovered for ourselves, without seeking it, that we are living an illusion.

Of course if the illusion is a very sophisticated one, it may take a very, very long time to discover. And so, in deciding what to believe now, time becomes a crucial factor. For truth is not a static, once and for all phenomenon. Some truths are true for all time, but many are not. What is true in 1899 may not be true in 1999 or 2199. The conditions that exist at the time of Neo’s choice may change.

Even if the real world outside the Matrix remains an unpleasant and dangerous place the machines or their computers may not continue indefinitely to make the illusory world a better place. They may develop an alternative source of energy and cease to have any further use for human beings, or find they get more energy from us if they make our lives unpleasant. If we lack awareness of reality outwith the Matrix we are deprived of any chance of improving or escaping our situation. With no knowledge of reality, of the motivations of the machines, how these might change and how soon, we would have no warning and no ability to protect ourselves. We may need to know now if we are to survive.

In summary, Neo can take the blue pill; with one claim for it, that of never knowing the truth rejected, impossible to guarantee over time; and the other, that of a relatively comfortable existence, utterly uncertain. Or he can take the red pill which carries no guarantees, but can potentially give him the chance to understand reality and influence it for the better. The more time passes the more likely this potential is to be fulfilled as human brains process and use the information. We know of no limit to time, and so no limit to this potential. The choice must now be made – the red pill it is.

I suggested that this was more than a philosophical exercise. The insights gained here are generalisable, since they show us an essential connection between truth and time. We can use this to begin to reconcile the three theories of truth. As time progresses different levels of truth, for example that of direct human experience and that of particle physics, will correspond to each other more closely as the connections between them are better understood. With the passage of time, through greater understanding and incremental improvement, knowing what is true seems increasingly certain to lead to what it is preferable to experience. Over unlimited time coherence also becomes a necessary condition for truth, since lack of it shows logical discontinuity. Thus as time tends toward infinity, truth can be identified as the point upon which the correspondence, pragmatic and coherence theories are all converging.

What can this tell us about practical dilemmas that oppose truth and illusion? Over unlimited time we will come to find the truth and also find that we must know it to suit the world to our purposes. Is this rendered irrelevant by the fact that most human problems involve limited time? I don’t believe so, because while time defines change it is in turn defined by it. In which case the faster we can process information, the more effective time we have. Since time is indivisible, we need accept no upper limit to the speed at which we close on the truth and at which we increase the value to us of that truth.

How then do we decide whether to tell someone that they have a terminal illness? The problem is this. If well-being is impaired then time is effectively reduced. Without truth the ability to respond effectively to the situation is reduced. What we can do, although we can’t directly make time infinite, is effectively extend it by making our communication more efficient and more responsive. The more detailed attention we pay to how we transfer information, and to understanding the responses we receive, the more we can obtain of the power held by truth in even the most unpromising reality, whether this be that of our own lives or of Neo’s fictional one in ‘The Matrix.’

Bibliography
Schmitt, Frederick F.(1995), Truth: A Primer, Westview Press: Boulder, Colorado and Oxford.
Hospers, John (1997), An Introduction to Philosophical Analysis, 4th edition, Routledge: London, pp 41-47.

© Diarmid J G Weir 2010

Future Economics - People, Money and Power

No Miracles Here

‘Faith in science is at least as superstitious as any faith in God’.

My response was:

I don’t believe it is, despite the problems I mention in my earlier post. If we broaden ‘science’ to include all knowledge acquired by the experimental method – ie: we find a consistent correlation between particular events, assume this to be a persistent feature of the world, and then proceed further on this basis – then this method is adopted because it is self-reinforcing. We can build up a network of propositions that, while none of them are certain, tend to support each other. Every time we find one confirmed, this helps in a small way to confirm the others.

Faith in God (meaning I presume the belief that God exists, is benevolent and is important to mankind) on the other hand, seems to result in the opposite. If the above features of God are assumed, we are led immediately into contradictions. Many believers in God are in conflict, despite sharing these apparently over-ridingly important beliefs. God would appear to allow (or at least fail to prevent) much evil. And why does belief in God not seem to lead to any important further hypotheses, but in fact rather to close them off?

The commenter’s response was then about the benefits of religious belief (by which it turned out he exclusively meant Christian belief). So I replied:

I was arguing that ‘faith in science’ is less of a ‘superstition’ than ‘faith in God’, on the background of some previous comments I made about the problems of grounding the scientific method. What I was trying to get across is that the ‘beliefs’ that arise from science tend to be re-enforced by our ongoing experience of the world, whereas this is not true of beliefs about God.

Your initial response seems to be that ‘Christianity’ has been a great force for good in the world. It may well have been. But this doesn’t necessarily tell us anything about the robustness to experience of its belief system as it relates to God.

And I don’t understand why you now switch from arguing for ‘faith in God’ to simply arguing for ‘Christianity’. If you do so then you now have to explain why one person’s set of religious beliefs, other than those I suggested, can be shown to be more robust to experience than another person’s different one.

As for your ascribing blame for the ‘gulags and the concentration camps’ to atheists, I am not sure what this says about the robustness of specific beliefs in relation to God. It might suggest that the morality reportedly taught by Christ (and unfortunately not always followed by those claiming to be Christians) is a powerful buffer against the grip of evil pseudoscience. But plenty of non-believers have similar moral views without the accompaniment of ‘faith in God’.

In summary, I’m accusing you of shifting the goalposts!

Well, he denied shifting the goalposts, but then came back with some more evidence about the benefits of religious belief over its absence and the nature of Christian morality, so I said:

The reason I say you are shifting the goalposts, is because you are making value judgements. To say ‘Faith in science is at least as superstitious as any faith in God,’ which was your original assertion, does not seem to me to have any value implications. It is a factual assertion about the ways in which these beliefs come to exist and to persist.

But your argument is that ‘belief in God’ (by which you exclusively mean belief in the factual truth of Christian teaching about God and everything you believe goes with it) leads to a better world than any alternative. That, I would not profess to be able to argue one way or the other – nor do I think it would be constructive to do so.

‘Faith in science’ is a belief that a certain ‘method of enquiry’ about the world is self-consistent even across many different observers. That to me is what makes it not superstitious. It seems that you accept this for the physical but not the social sciences. Is this because of your analysis of the method of the social sciences or because their findings sometimes conflict with Christian teaching?

‘Faith in God’ cannot be self-consistent between observers in the same way as the scientific method. It is possible to copy the scientific method without initially believing that it works, and yet obtain evidence that it does. Clearly to copy ‘faith in God’ without believing in God is a contradiction! I think that the most you can hope for is that your belief in God leads to evidence that further convinces you, the believer.

I think you might risk betraying weakness in your position in some of your other assertions. You say ‘Christianity preaches sacrifice, the embrace of suffering, taking up one’s cross and cheerfully carrying it in Christ’s footsteps.’ to refute my claim for morality outside Christianity. I think you should consider whether it is ‘moral’ in itself to sacrifice oneself or to suffer, or whether it is necessary for there to be some appropriate purpose to the sacrifice or suffering. I think ‘moral’ atheists and Christians would agree more often than not on what counted as an appropriate purpose. (In this I should declare a long-standing admiration for Dietrich Bonhoeffer.)

You say ‘Atheism, the most intrinsically mendacious religion, is the seedbed of theft, murder, state terrorism, disorder.’ If we define atheism as the lack of ‘faith in God’ (you may mean something else) I think you are left with the burden of proof here. And even if you prove it, what would you do about it? Can you make people believe in something? Or are we talking about a sort of ‘Pascal’s Wager’ pretence here?

I didn’t think there was much more to say, although on reflection I thought I might have expressed the argument more tellingly, and it belatedly occurred to me that the commenter was actually using the scientific method in his own argument! So when he responded to the previous post by basically ignoring my points about the difference between truth value and ‘moral’ value, and simply pushing more evidence of the superior moral behaviour of Christians (especially as seen from a Christian viewpoint!), I took the chance to recast the argument a bit.

My point was that the holding of a belief in the tenets of the Christian religion is not a belief about acquiring the knowledge that event A leads to event B on a consistent basis, when event A is not that belief.
So it is logically possible that belief in the tenets of Christianity always and everywhere leads to all sorts of wonderful things (and indeed the converse: that the absence of such belief leads to madness, unhappiness and worse), even although those tenets are not literally true. Any evidence that supports the former is therefore not evidence that supports the latter.

Whereas, the scientific method (the belief that if event A has been regularly observed to lead to event B, then it will continue to do so) is literally true if its predictions that event A (when event A is not belief in the scientific method) will lead to event B are always and everywhere correct. Otherwise we are led into a contradiction. This means that any evidence that subsequently supports A leading to B also confirms the truth of the scientific method.

I haven’t actually posted this, since neither he nor I have so far identified any actual weakness in the foregoing argument and I wanted to say a few more things in the allotted 500 word space, which were:

Your claim that the evidence of history suggests that belief in the tenets of Christianity always and everywhere leads to a better world, can only be relying on the scientific method! You are implicitly claiming that because the evidence of history shows that people who have held Christian beliefs have behaved much ‘better’ than those that did not, the more that hold such beliefs now the better human behaviour will be.

So if you claim that Christian beliefs can rely on the scientific method it may be misleading to say ‘Faith in science is at least as superstitious as any faith in God’. ‘Faith in science’ could logically only be less superstitious or equally superstitious. In fact, your argument bases the ‘effectiveness’ of the tenets of Christian of belief on an application of the scientific method, and no application of the scientific method can ever be incapable of future disproof. Therefore, the absolute belief that ‘Christianity works’ in the sense that you mean is likely to be ‘more superstitious’, since it relies firstly on implicit belief in the scientific method, and secondly on an application of that method.

To be honest, having said all that, I am not sure that you or I should consider this logical argument to be all that important. After all, if I am correct, your argument about the benefits of Christian belief can stand on solid ground. So why not trade points? You accept that the scientific method can be self-supporting in a way which belief in God cannot be; and I accept that the balance of evidence (which would have to include all the bad things done by Christians, all the good things done by non-Christians and a common scale for measuring these things) shows that Christians behave better than non-Christians.

We would then move on to what I think are more fundamental questions:

1) What if, speaking purely hypothetically, the evidence came to show that some other group, perhaps very small and not yet discovered, with different beliefs, behaved even better than Christians? Would you then immediately be convinced of the need to adopt those beliefs?

2) Assuming, purely hypothetically, you found yourself wanting to adopt the above beliefs how would you go about it?

3) Given that we are relating behaviour to the holding of certain beliefs, what can we say about the beliefs of God that lead him/her to ‘allow’ non-believers to do all the bad stuff they do? Is God, perhaps, not a Christian?

4) Or is it simply that he/she has limited power to intervene? If so, what is the causal mechanism that explains the good behaviour of Christians? (We can’t assume that it’s simply because they accept Christian moral teaching, since it would then be possible to be moral without being a believer.) If you can identify a causal mechanism, how would you go about proving it to be the correct one? Would the proof rely on the scientific method?

Are these fair questions? I’m not sure. But they are certainly the questions that occur to me when I think about religious belief. Let’s see if we get a response.

Future Economics - People, Money and Power