Collective Conscious

After a hia­tus due to the var­i­ous com­mit­ments imposed by grad­u­a­tion, vaca­tion, and assorted fam­ily busi­ness, I return to the blo­gos­phere to find that the free world has been largely unable to hold itself together in my absence. EconoS­peak has a lovely piece on the unimag­in­able chaos:

I feel guilty in not uphold­ing my turf here at EconoS­peak; I should be issu­ing thun­der­bolts about the debt ceil­ing nego­ti­a­tions, the sag­ging econ­omy, the slo-​​mo Euro­zone melt­down, and sim­i­lar per­ils. But I can’t seem to do it. The whole bloody mess is just too stupid.

The US econ­omy is clearly floun­der­ing, and ele­men­tary macro­eco­nom­ics says we need fis­cal stim­u­lus, yet both Obama and the Repub­li­cans are debat­ing how to stran­gle the pub­lic sec­tor in order to raise a debt limit that makes no sense in the first place. Euro­zone politi­cians crow over their suc­cess in impos­ing yet another austerity-​​cum-​​bailout pack­age on Greece, one that no inde­pen­dent eco­nomic observer, much less the finan­cial mar­kets, have the slight­est faith in. (As if round­ing up the rat­ing agen­cies and send­ing them to some Euro-​​Guantanamo will keep periph­eral sov­er­eign rates from march­ing ever upward.)

There are lots of inter­est­ing, com­plex issues in polit­i­cal econ­omy. None of that mat­ters now: the world is in the hands of politi­cians gov­erned by expe­di­ency cal­cu­la­tions whose time hori­zon can be mea­sured in weeks. As far as I can tell, the gross illogic of their poli­cies is sim­ply beside the point.

It’s true. We’re largely unable to do any­thing about the world’s crises, but I don’t think all hope is lost. At the very least we can record and inter­pret what is hap­pen­ing around us; this is the sort of project that Keynes under­took as the world’s lead­ers were set­ting in place the insti­tu­tions that would even­tu­ally cause WWII.

Besides that we can learn and inno­vate. My present project is an exam­i­na­tion of the most basic assump­tions of mod­ern eco­nom­ics — the mean­ing of value, the goals of the dis­ci­pline, and other fun­da­men­tal ques­tions that too often go unasked in eco­nom­ics. For exam­ple. This week I picked up a copy of Joan Robinson’s Eco­nomic Phi­los­o­phy, which begins by assess­ing the need for moral orga­ni­za­tion in eco­nomic soci­ety. She writes:

Any­one indi­vid­ual, as an indi­vid­ual, does not carry any appre­cia­ble weight.… It is cer­tainly right that every­one should feel it is his duty to vote, but he can­not be per­suaded by rea­son. He must think it is right because it is right.

I think Robin­son is miss­ing some­thing here. Her exam­i­na­tion of basic ethics has largely the same foun­da­tion as mine, which is that we as a soci­ety are con­stantly faced with collective-​​action prob­lems that unravel if we can­not coerce coop­er­a­tive behav­ior. We solve the prob­lems in many instances with moral­ity. But I don’t buy into the more mys­ti­cal approach that she applies here. Things aren’t right or wrong for no rea­son; they are right because we have decided they lead to social out­comes we pre­fer — or that are strictly superior.

It’s nit that rea­son plays no role in these deci­sions; it’s that ratio­nal­ity, as defined by mod­ern eco­nom­ics, plays no role. If we let indi­vid­ual profit-​​maximizing agents make every deci­sion, then we will not suc­ceed as a whole society.