Monday, August 31, 2015

Civil Society Man, Not Economic Man

If idle hands are the Devil's workshop, the Protestant work ethic would seem to naturally emerge from Christian theology. Of course, one can work as well as a serf under a lord for as for oneself, so this is hardly a sufficient condition for the emergence of wealth-generating free market capitalism, even if such willingness to work long and hard is one of its many necessary conditions.

Even so, the emphasis on work does not necessarily imply a concern with economic conditions. Neither, too, does the emphasis on innovation, as discussed by Deirdre McCloskey in The Bourgeois Virtues, imply this, not certainly does the emphasis on scientific discovery. Even Adam Smith's investigation into The Wealth of Nations was an exercise in moral philosophy first and foremost, an accompanying piece to A Theory of Moral Sentiments.

Indeed, most philosophers throughout most of Western history were primarily concerned with ethics and political philosophy, and any economic concerns were at best footnotes to that political philosophy. Why, then, the extreme emphasis on economic conditions in the 20th century and now?

If you read the great thinkers prior to the rise of Marx, economic materialism wasn't a primary concern. Political philosophy was. After the rise of Marxist thinking, especially in the 20th century, the concentration was increasingly on economic conditions and materialism. This so permeated the culture that even anti Marxists have ended up thinking in Marxian categories. Marxism is not and never really was an economic theory. It was a political theory. The fact we get that wrong underscores the degree to which Marx's materialism and making economic conditions primary has affected even our thinking about Marx. He was no economist, and he certainly never thought of himself as one. He was a political philosopher.
The fact that the West is obsessed with economic conditions rather than ethics or political philosophy can be traced to Marx. In fact, it's amazing the degree to which our thoughts have been influenced by Marx's materialism. If you see economics as the explanation of everything, you're in some fundamental sense a Marxist. Opposition to immigration can't be due to racism; it's because of concerns about the economy. Terrorism can't be due to religious beliefs; it's because of economic conditions. Nobody likes your art? Must be due to the dominance of the market economy. Crime? Can't be cultural or subcultural; must be due to economic conditions.

None of this is to say that the economy isn't a factor in people's lives -- in all people's lives -- but rather that for the vast majority of people, it's hardly the primary concern. Or even a secondary one. Economics is not the driving force in most people's lives. It is something we can use to meet certain needs for many other ends. I suspect it's almost exclusively anti-market leftists who are the most obsessed with the economy and materialism. Almost nobody else (other than those libertarians who think everything can be explained using economics) does.

Yet, our major thinkers and secondhand dealers in idea all treat economics as primary. And most of those people are leftists. It is they who think of humans as Economic Man. But Economic Man is but a small part of being human. What we need to revive is Civil Society Man. That is, people who are involved in the moral order, the artistic orders, the religious order, the economic orders, the scientific order, the philosophical order, the philanthropic order, etc. Not just political man, not just economic man, but civil society man is who we need to model, discuss, and think about. 

Sunday, August 16, 2015

When Government Colonizes Different Spontaneous Orders

There are a variety of spontaneous orders. We too often only think of the economy as a spontaneous order, but there are also the scientific order, the philanthropic order, the philosophic order, the religious order, the democratic order etc.

I believe that each of these orders provide things the other orders absolutely cannot. This is why I oppose the colonization of the economic order by the democratic order. That colonization is called socialism. Socialism only involves the takeover of the economic order, or catallaxy. It does not involve the colonization of any other order.

Of course, colonization can be complete or incomplete. If the economic order is completely colonized, we have socialism; if it is only partially colonized, we have various degrees of interventionism. This is true of all orders, though for the sake of clarity, I want to deal with only complete colonization.

The colonization of the philanthropic order by the democratic order is known as the welfare state. When an area of philanthropy is colonized by the democratic order, we call that "crowding out."

The colonization of the religious order by the democratic order is known as theocracy. The same is true in reverse.

The colonization of science by the democratic order would mean that all science is being done in government-run laboratories. The goals of science would be predetermined by the government. This would be known as "socialized science." Michael Polanyi famously argued against this taking place.

The colonization of our educational institutions by the democratic order is known as public education.

The colonization of the health/medical order by the democratic order is known as "socialized medicine." 

The colonization of the monetary order is known as central banking.

Too many people are a little fast and loose with the term "socialism." Properly understood, socialism only involves anything in the catallaxy. This can include sub-areas within the catallaxy, such as medical provisions, meaning that if we have socialized medicine, that would be socialism applied to a particular area of the economy/catallaxy. But not everything is involved in the catallaxy -- nor should it be. I don't know what we have terms for the catallaxy colonizing other orders, but I would suggest that it would be as problematic as having the democratic order colonizing everything.

Thus, the colonization of philanthropy by the democratic order is not socialism. The philanthropic order is not part of the catallaxy. These are two quite separate orders, and rightly so. The arguments for and against the government colonizing either the catallaxy or the philanthropic order are and ought to be completely different. I would suggest that confusing the two only harms the arguments being made by those who argue against socialism. Further, too many who really favor an extensive welfare state think they favor socialism. They don't. Or, they don't necessarily. The two can be separated. The two are separate issues. And I think it would benefit everyone -- libertarians especially -- if they understood these distinctions and didn't mistake everything for being in the catallaxy.

I mean, suppose the democratic order decided to colonize the artistic order. Now all poems would be produced by government poets on topics determined by the democratic order. Is that socialism? No. But it's probably a recipe for a whole lot of really bad jingoist poetry.

Saturday, August 15, 2015

Welfare is NOT Socialism

I have come to realize that too many people -- on the left, on the right, and even far too many libertarians -- are deeply confused about the nature of socialism. I keep hearing people claiming to want socialism when what they really want is welfare. I keep hearing people complaining about socialism when what they are really complaining about is welfare.

The issues surrounding government involvement in the economy qua economy are completely separate from the issues surrounding welfare provisions and the ways to pay for those provisions. It is perfectly possible to have a completely unregulated, free economy combined with government-provided welfare. Equally, one could have an economy completely controlled by the government without that government providing a single dime for welfare-type programs. We perhaps confuse the two because of Marx's combining them in his famous phrase, "To each according to their need, from each according to their ability." But they are not at all necessary companions.

One consequence of this confusion is the mistaken identity of welfare as socialism. I keep hearing people arguing for socialism, but when you get the details, they really only want more welfare provisions. One can receive money (it is always money, in a variety of forms, though some of those monies cannot be spent but in certain ways, depending on the programs) from the government without that government owning or controlling the means of production. More, most people don't understand that socialism means central planning -- even market socialism involves central planning. The latter attempts to allow for prices, but in the end, everything is owned by the central government and the economy is thus completely folded into the government itself. Most people don't realize that this is what socialism means, or that this model has been refuted over and over, in a variety of ways. If you want the complete destruction of the economy and the elimination of all wealth in the economy, socialism is the way to go. Why? It eliminates the entrepreneur, which is the only source of wealth creation in the economy. No entrepreneurs, no wealth creation.

Of course, most people who talk about socialism don't actually mean this. No, what they really are talking about is increased welfare provisions. Those provisions can extend from food stamps and housing to a single payer for health care to a basic income guarantee. This is why you can find some avid opponents of socialism and government intervention into the economy, like Hayek and Milton Friedman, making arguments in favor of basic income guarantees, negative income taxes, and even single-payer, universal health insurance. They were smart enough to understand that welfare has absolutely nothing whatsoever to do with socialism or interventionism.

This isn't to say that the taxes necessary for welfare or the welfare itself won't have an effect on the economy. But having coincidental effects is not the same as legislation directly regulating what a given business can or cannot do. One can oppose the minimum wage while favoring welfare. Equally, once can oppose welfare while favoring the minimum wage (as a way of getting people off of welfare, though that would ignore the fact that increasing the minimum wage necessarily increases the number of those unemployed, meaning it increases the number of people on welfare). Some early progressives favored having a minimum wage precisely because it would create unemployment among minorities, who would be starved out because there was no welfare available -- it was an attempt at eugenics through economic interventionism.

At the same time, not all taxes are created equally. If you want to discourage something, tax it. If you tax income, you discourage work. If you tax sales, you discourage buying. If you tax capital gains, you discourage business creation and expansion. If you tax property, you discourage property ownership. There are some things, like business creation and expansion, which you probably do not want to discourage. One could make the argument that since jobs are a cost, income taxes that encourage businesses to automate more and thus drive down prices are good for the economy over the long run. Licenses are also a tax -- on starting new businesses. If you want to discourage the creation of new businesses, licenses and capital gains taxes are the way to go.

Equally, subsidies encourage certain behaviors. Subsidies can come in a variety of forms, including artificially cheap loans, insurance, or government protections. If you want to encourage risk, make risk cheaper. Socialize risk by providing cheap government-provided insurance. Government flood insurance encourages people to build in flood plains, creating far more property destruction and loss of life when people's property is flooded.

Those who confuse government regulations on the economy or government control of the economy with welfare are confusing taxes for subsidies, and vice versa. Also, the data on things like negative income taxes and basic income guarantee suggest that they do not encourage people to not work per se, but rather give people the leeway to hold out for better jobs or to create new businesses. As such, these programs can in fact improve economic conditions. But only if the government doesn't at the same time erect barriers to entry and growth such as licenses, regulations, and taxes on capital gains.

Those who truly want people to have better lives need to understand the difference between socialism/interventionism and welfare. The arguments for and against each are completely different. They really have nothing at all to do with each other, and confusing them only harms the arguments in favor of free markets. The arguments for free markets and against interventionism/socialism are one thing; the arguments for and against various welfare programs are quite another. Each of these can be combined in a variety of ways. If we understand this, we can understand how Hayek and Milton Friedman were able to argue for some of the programs they did, even while completely supporting free markets.

Sunday, August 09, 2015

Approaches to Economics: A few definitions

Classical Economics -- complex model building using a combination of empirics and logic to explain those empirical observations. 

Econometrics -- making simple mathematical models of the economy and then recommending policies to make the real world fit the models.

Keynesian Economics -- given the institutions we currently have, what will fix or maintain the current situation right now, with little to no consideration of the future.

Marxist Economics -- an anti-empirical, logic-based system beginning with the premise that value is created through labor; given that value is subjective, the entire system completely collapses (much like actual attempts to realize Marx's vision in the real world).

Central Planning Socialism -- given econometric models as ideal and given the belief that the economy can be completely predicted and controlled (through econometrics), the ideal system; given that prices cannot ever be calculated, the worst idea ever.

Democratic Socialism -- replacing the market with votes; the end-result is the creation of government monopolies and the inability to determine prices to help with the most efficient distribution of materials, goods, or services.

Complexity Economics -- algorithmic model-building with the goal of getting the models to match the real world. Both negative and positive feedback taken into consideration.

Austrian Economics -- an approach to economics beginning with human action and human motivations to satisfy their perceived needs and values. It also uses empirics and logic to explain those empirical observations. It also uses algorthmic model building to explain the emergence of spontaneous orders and how they affect human (inter)actions.

Behavioral Economics -- humans do not act rationally, so we need equally arational humans to design systems to make people act more rationally, to fit our econometric models. Potentially, an insightful approach to economics, once it completely abandons mainline economics / econometrics.

Neoliberal Economics -- whatever system progressives disapprove of. It means anything and nothing.

Progressive Economics -- changing whatever we have, regardless of any understanding of economics, regardless of whether or not what we have is now working ir if anything in the past worked.

Fascism -- a form of political economy in which the government controls the economy through regulations and by allowing private citizens to pretend that they are the ones who run and own the means of production when it is in fact the government which does. Also known as corporatism, as it takes the corporation as the ideal model on which all of society should be designed. A combination of nationalism and socialism. Given its dominance in the world, the most successful threat to free market capitalism ever developed. Its success comes from the fact that it is structured in such a way that its failures can be blamed on a non-existent free market or "deregulations" that never took place, creating the conditions for more regulations to be imposed on the economy.

Friday, August 07, 2015

Macrosocial Evolution -- Cycles and Emergence

I am convinced that human social history demonstrates a variety of patterns. There is increasing evidence for this, ranging from Kondratieff waves (K-waves) to Peter Turchin's secular cycles. 
The Kondratieff wave cycle goes through four distinct phases of beneficial inflation (spring), stagflation (summer), beneficial deflation (autumn), and deflation (winter). Since, the last Kontratyev cycle ended around 1949, we have seen beneficial inflation 1949-1966, stagflation 1966-1982, beneficial deflation 1982-2000 and according to Kondratieff, we are now in the (winter) deflation cycle which should lead to depression. 
By this, the depression cycle should last from 2001-2020, more or less, since all the other "winter" periods lasted about 20 years. Is it any coincidence that 2008 is close to the dead center of that range? I think not. This also implies that there will be a beneficial inflation 2020-2035/40. Given the degree of quantitive easing in which the Fed engaged, I think there is little doubt that inflation will be on the horizon. One hopes it will in fact be beneficial.

Coincidentally, Turchin's secular cycles, when mapped onto the K-waves, give interesting patterns.

1970 was in the middle of a stagflation period.
1920 was at the end of a stagflation period.
1870 was during Reconstruction, near the end of a plateau leading to depression.
1820 was at the beginning of a plateau, during the "Era of Good Feelings" -- a time, coincidentally, when there was not a peak of violence.
1770 was in a depression cycle, and of course was the lead-in to the Revolutionary War.

2020 will come at the end of our depression cycle, at the opening of an expansionary period.

It is my suspicion that 2020 will also do a number of other things. It will be the swan song of the social conservatives and of the kinds of  nationalist sentiments being fostered by Trump and Sanders. It will also spell the end of our Egalitarianist society (in Gravesean terms), and the emergence of an Integrationist society. Given that this means a tier-leap, meaning an exponential leap, it would not be surprising to me if we will be facing the kind of revolutionary violence as we saw in the American and French Revolutions. The former moved the U.S. into a more liberal society (entrepreneurial level), while the latter attempted to move French society into an Egalitarian society (failing, because it attempted to skip a level).

We saw in 1920 and 1970 egalitarian upheavals, with the first one applying pretty much only to white males, with the latter expanding the franchise to minorities of all kinds.

2020, I suspect, will be an Integrationist upheaval, perhaps first only affecting the West, perhaps also including economies like China and India, with the rest of the world being included in 2070. Perhaps, though, 2070 will be a Holistic upheaval, since there is good evidence that increasing complexity evolves ever-more quickly over time.

But if 2020 is in fact an Integrationist upheaval, creating an Integrationist society to replace the Egalitarian society in which we currently reside, I suspect that 2020 will make the violence of 1970 and 1920 look like cake walks. The aftermath, however, will give us a radically different society than the one we have. We will see the final breakdown of hierarchical organization and the more widespread embrace of scale free network processes. We aren't talking about the false kinds embraced by the egalitarians, whose flattened hierarchies are still hierarchies, but real scale free networks with nobody really in charge, just algorithms aiding smooth coordination. Think Uber applied to the entire economy, to the degree that it is possible to do so.

Such a society is more accepting of differences, heterogeneity, complexity, uncertainty, ambiguity, and change. It is more cosmopolitan, favoring diversity and movement over artificially created political boundaries. Such a society will be more interested in information and the accumulation and use of information. It will be interested in both micro and macro views of life, mind, and society, recognizing the necessary interactions between those views and among those aspects. Such a society will recognize the negative feedback dominating at the micro social level and the positive feedback dominating at the macro social level, and the bipolar feedback driving complexity of society in their necessary interactions. In other words, such a society will finally come to terms with the fact that all elements of human society are spontaneous orders.

In fact, we have to understand these interacting elements if we are going to understand the interactions of these macro-level social patterns. With a macro-only view, we would expect to just see cycle-after-cycle going on into infinity without change. But I suspect that we have seen these saves -- K-waves and secular cycles -- shortening over time. Why? Because these waves are taking place in societies which have different features due to emergent complexity. Greater complexity shortens the temporal experience of that process. Interacting negative and positive feedback give rise to biotic processes with the property of being able to leap into a new level of complexity. Combine the micro patterns of human interactions giving rise to negative feedback with the macro patterns giving rise to positive feedback, and you get the bipolar feedback described by Hector Sabelli.

If you want a more accurate understanding of the evolution of our social world, I think we have to combine the work of J.T. Fraser, Kondratieff, Hector Sabelli, F.A. Hayek, Clare Graves, and Peter Turchin. If this gives rise to a model of society that is insanely complex, well, that just means we're finally on the right track.

Thursday, August 06, 2015

Contradiction vs. Paradox

I affirm a metaphysics of paradox. Anyone who has read enough of my works -- academic, popular, and blogs -- knows I affirm paradox. But what is a paradox?

First, a paradox is absolutely not a contradiction. If anything, paradox and contradiction are complete opposites.

The word "paradox" comes from the ancient Greek para-, meaning "contrary to", and doxa, meaning "opinion." A paradoxon is thus a statement contrary to opinion. This, at least, is its etymological meaning. Doxa comes from dokein, meaning "to appear, seem, think." Thus, a paradox is contrary to appearance. For example, we think that something is either attractive or repulsive, when in fact there are processes which are simultaneously attractive and repulsive (like strange attractors).

The word "contradiction" comes from the Latin contra, meaning "against", and dicere, meaning "to speak." Thus, a contradiction is literally "to speak against." To contradict something is to speak against it. If two things are in contradiction, that means they are mutually opposed to each other. In a sense, each speaks against the other. For example, a shirt of a single color cannot be both red and blue at the same time -- it must be either red or blue.

A good example of a paradox is the relationship between competition and cooperation. Many think of these two things as being in opposition -- as even being contradictory. That is why so many who favor cooperation vilify competition. Yet, these two are not at all in opposition, except in extreme cases, such as, say, golf or tennis. And even then, both parties have to cooperate on when to play and where. With the vast majority of sports, you not only have this level of cooperation, but you have to have cooperation within the team itself in order for there to be competition between the teams. Cooperation between the teams (or the individuals) in regards to the game play itself would be considered corruption of the game itself. Cooperation cannot enter into what is the proper realm of competition without there being corruption, and competition cannot enter into what is the proper realm of cooperation without the possibility of game play itself being rendered impossible.

This may begin to point to why it is that corruption exists. If we have cooperation where there should not be cooperation, and should in fact probably be competition, you get corruption. Corruption exists where businesses and governments cooperate. Corruption exists where businesses that ought to be competing with each other are cooperating (typically because the playing field has been made more conducive to this kind of cooperation by the rule-makers, i.e., government).

The word "corrupt" comes from the Latin cor-, meaning "altogether", and rumpere, meaning "to break," meaning that to corrupt is to break altogether. This suggests the breaking or breaking down of a system, to break it altogether. Those who thus favor cooperation-only favor corruption. The presence of competition prevents or at least reduces corruption.

The elimination of paradox simplifies the system in question, making it far less interesting. A game in which the two teams are cooperating to create a given outcome will not be interesting to the viewers. They will rightly feel cheated when they find out that the game was rigged. They will realize that the outcome was not in fact unpredictable, and unpredictable outcomes are a feature of all complex systems. Predictable outcomes are a consequences of simple systems. But simple systems cannot create wealth or interest or freedom; only complex systems can create wealth or interest or freedom. Paradox creates complexity, and complexity results in creativity and wealth.

All of this is, of course, contrary to opinion. Yet, it is true.

One can also imagine a contradictory proposition. Can one simultaneously be an anarchist -- in opposition to someone ruling -- and also favor a more expansive government? The anarchist speaks against government, and government speaks against anarchy. You cannot be a big government anarchist. That is a contradiction.

So don't confuse contradiction and paradox. They are opposite things, even if they appear to be the same. Contradictions are truly incompatible, while paradoxes only appear to be so, unless you understand the true relations between the parts.

Wednesday, August 05, 2015

2020: Civil War in the GOP?

Infamously, the 1968 Democratic Convention, held in Chicago, was wracked with protests -- from the far left. There had been a civil war within the Democratic party, for the soul of the party, throughout much of the 1960s. The conservative southern Democrats vs. the liberal northern Democrats; Jim Crow vs. Civil Rights; hawks vs. war protestors. The more extreme leftists weren't satisfied with mere protest. We had violent terrorist groups, ranging from the Black Panthers to the Weather Underground, rise up as well. The violence peaked in 1970, but it continued throughout the 1970s, with laggers like Ted Kaczynsky continuing their terrorism through the 1980s.

The 1960s-70s was a peak of violence centered around the development of the left and the divisions within the Democratic party. The violent fringe elements were assimilated into general society through the left-dominated institutions, like our universities, while the southern Democrats were, essentially, ejected from the Democratic Party. Left adrift, they were picked up by the Republicans, creating the contemporary Republican party with Nixon's southern strategy. Excepting the Reagan Revolution, which only really lasted Reagan's 8 years, the GOP is the party of Nixon -- a party of southern social conservatives and Keynesians.

Today we are seeing a return of the kind of violence as saw leading to the peak in 1970. Except this time, it seems the perpetrators are on the right. I have talked about Peter Turchin's cliodynamical prediction of a new peak in violence in 2020, and it seems to me that this time it will involve the right and the Republican Party. I suspect there will be a civil war within the GOP between the southern social conservatives and the libertarians. I predict it will be these two groups precisely because the "moderate" Keynesians don't care what social policies they need to support to get power. It is the social conservatives and the libertarians who have principles. That is, they care enough to fight.

We are seeing a surge in violence from the far right, with Dylan Roof's targeting African-Americans at their own church or the recent cinema shooting in Louisiana in which the shooter seemed to be a misogynist targeting women. The police seem to be increasingly emboldened, despite the omnipresence of cameras. The #BlackLivesMatter movement has been taken up by the libertarians and dismissed or worse by the social conservatives, who inevitably support the actions of the police no matter what they may do.

For those who don't think that the libertarians within the GOP are strong enough to wage a civil war within the party, you have to remember exactly how weak the far left within the Democratic party was early in the 1960s. Yet, by the 1970s, they were a vital force, and now they dominate the DNC.

What, then, can we expect to see? Will the Southern social conservatives be ejected yet again? Who will take them up? The Democrats? It's not impossible. Southern whites view themselves as a victim group, and in this sense they would feel at home in the DNC. Of course, if they moved into the DNC, that would be a major disruption to the coalition that now makes up the DNC. The libertarians would be in a position to pick many of those people up, though, to be honest, a more conservative Democratic party would probably be even more attractive to African-Americans and Hispanics who are really socially conservative. It depends on how divisive the Southern social conservatives insist on remaining.

It is also possible that the libertarians are ejected. That would mean two Keynesian parties who only differ on social issues. Liberalism would become a true minority view in this country, which would mean the final and complete destruction of our liberal institutions. In other words, we could see just the final blow to liberalism in the violence of 2020. Let us hope the opposite is true.

I talk about cliodynamics here and here and here and here and here and here and here