Sunday, February 06, 2011

The General Theory, Ch. 4

In Ch. 4 of The General Theory, Keynes argues that treating all labor as homogeneous is not a problem because

in so far as different grades and kinds of labour and salaried assistance enjoy a more or less fixed relative remuneration, the quantity of employment can be sufficiently defined for our purpose by taking an hour's employment of ordinary labour as our unity and weighting an hour's employment of special labour in proportion to its remuneration; i.e. an hour of special labour remunerated at double ordinary rates will count as two units. (41)
This is how he's making the labor of a CEO and the labor of a McDonalds clerk equivalent.

Let us do some ecology like Keynes does economics. Let us say that we are doing to study mammals. How would we make mammals homogeneous? Well, the easiest way, I suppose, would be to measure them all by volume. We would consider the volume of the smallest mammal -- a kind of shrew -- as a single unit, and the volume of a mammal ten times its size to be ten units. We would then add the volume units of all the mammals together. This would give us an aggragate mammal unit, which we could compare on a year-by-year basis to understand the relative health of the ecosystem. If we see a stability in units, or even an increase, we can assume that mammalian ecology, at least, is healthy. I would not be in the least bit surprised if we learned that the number of units of mammals has in fact increased over the last century or two. The conclusion one would reach, then, is that mammalian ecology has improved over the last century or two.

But of course, this is absurd. If we disaggregate the data, we find that numerous mammalian species have gone extinct over the past century or two. Others have reduced in numbers to become endangered or threatened. The increase in volume can be attributed, then, to the vast increase in population in humans, cows, pigs, sheep, rats, and others closely tied to human beings over this same time period. We see a decrease in wild biodiversity at the same time as we see an increase in the number of humans and domesticated species. All of these facts are hidden when we consider mammals as homogeneous. The result is an absurd conclusion regarding the state of the ecosystem. In fact, when we measured by mammalian volume units, we came to the opposite conclusion about the health of the ecosystem as we did with the disaggregated data.

The fact that this approach can result in the opposite conclusion one would reach with disaggregated data that reflects reality more accurately should make one highly suspcious of it. Well, because it is suitable "as material for the differential calculus" (40), I suppose. The result? The ability to come up with a precise quantitative answer. Never mind that the answer probably doesn't match reality.
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