HPCT and Ayn Rand

CSGnet Archive CSG2004
21

[From Bill Williams 6 January 2004 9:45 AM CST]

Bill says,

[From Bill Powers (2004.01.06.0736 MST)]

For transactions to be voluntary, one
must have the realistic option of not participating in them.

The full myth underlying the notion that economic transactions are voluntary involves economic agents that supply their own neccesities independent of any social relationship. Then a question arises as to whether if economic agents traded a bit with each other they might all of them become better off. So, they trade some dried berries or a basket of nuts for a deer pelt. Obviously, because they already can supply themselves with everything they need for survival the trading they do _is_ voluntary. This tale obviously isn't reflective of any particular historical or contemporary reality. And, there isn't any way given the current technological realities that we can create a situation in which people can-- entirely in issolation-- create the commodities needed for existence. Human beings of neccesity live in societies, and societies come with constraints that aren't the product some voluntary constitutional covention. There is an obvious ideological content to this mythical explaination of the voluntary character of transactions-- and the ideological element is intended to support a particular cultural form the institutional structure of capitalism.

Recognizing that actual markets are never entirely voluntary doesn't mean that markets are evil, but they aren't simon pure either. Can markets be restrained or guided by democratic institutions? Sure, at least to some extent. Is a good thing to restrain the forces of the market? In some cases I think so. I don't want people to be allowed to buy votes during an election. And, I don't think it is a good idea to allow people to buy judges. I don't care if the transaction is voluntary or not. There are situations where market solutions are evil. If I was a believer, I wouldn't want my priest to be a profit maximizer. And, I sure don't want my doctor to be rational profit maximizer either. And, a profit maximizing general? No thank you! Nor do I want my policeman to be a profit maximizer. On the whole I see control as a conception that provides an alternative to maximization, rather than as a support for what seem to me to be outmoded arguments in favor markets.

Bill Williams

22

[From Bruce Gregory (2004.01.06.1206)]

Bill Williams 6 January 2004 9:45 AM CST

Two very informative posts. Thanks, Bill.

Bruce Gregory

"Everything that needs to be said has already been said. But since no
one was listening, everything must be said again."
                                                                                Andre Gide

"What is hateful to you, do not to your fellow men. That is the entire
Law; all the rest is commentary."

                                                                                The Talmud

23

[From Bill Powers (2004.01.06.1244 MST)]

January 6th already. What happened to 2004?

Bruce Gregory (2004.01.06.0953)–

I
would say that the primary goal (for those who follow this path) is
something much more obvious, espectially to people on
CSGnet.

I assume they want status for the same reason we want anything –
to

satisfy intrinsic needs.

That’s pretty much what I had in mind. But more simply, I think people
want to maintain control of their worlds. Status is one means to that
end, in a society that allows you to trade on status. Physical power,
deriving from economic power or just from big muscles, is another means
– but not the end. As you say, the ultimate end is satisfying
intrinsic needs.

Best,

Bill P.

24

[From Bill Powers (2004.01.06.1258 MST)]

Bill Williams 6 January 2004 9:45 AM CST

···

–

And, I don’t think it is a good
idea to allow people to buy judges. I don’t care if the transaction is
voluntary or not.

Beautiful.

On the whole I see control as a
conception that provides an alternative to maximization, rather than as a
support for what seem to me to be outmoded arguments in favor [of]
markets.

Precisely. Wasn’t there a story recently about a proposal to have people
vote on some factual matter by simulating a market? Silliest damn thing I
ever heard of.

By the way, I am about to give up on Smalltalk as a means of working on
the Test Bed project. I just can’t get off the ground with it. Maybe
someone else could get it started, but I think I’ll go back to what I
understand and program in Pascal (Delphi, that is). It should always be
possible to translate into and out of Smalltalk if anyone wants to. The
thought of searching through some 3800 objects to find a procedure that
resembles what I want to do is just too daunting.
Best,
Bill P.

Bill Williams

25

[From Bill Williams 6 January 2003 3:30 PM CST]

[From Bill Powers (2004.01.06.1258 MST)]

Bill Williams 6 January 2004 9:45 AM CST --

On the whole I see control as a conception that provides an alternative to
maximization, rather than as a support for what seem to me to be outmoded
arguments in favor [of] markets.

Precisely. Wasn't there a story recently about a proposal to have people
vote on some factual matter by simulating a market? Silliest damn thing I
ever heard of.

I think it helps if you consider that, and I hope I've got this right, the guy who had this idea was Poindexter. Now Poindexter had been in the Navy all his life. When he worked at the White House for President Regan he got himself in a bit of trouble when he let Oliver North loose on too long a leash. That and lying about it under oath got him a felony conviction which was later reversed on a technicality (maybe with good reason). Recently he was hired on by our current president to work with the Defense Advanced Projects Agency (DARPA). This in itself is a bit unsettling-- that they'd select this guy with his track record. Predictably Poindexter had a bright idea and organized this futures market in terrorism. It may be an indication of mean spiritedness on my part but, I seem to notice that there is a tendency on the part of some people who have worked for the government all their lives to develop exageratedly idealistic notions about freemarkets and efficiency and all. I don't think they ever said precisely how this futurese market in terrorism was supposed to work. Or maybe I just couldn't believe how they said they thought it was going to work. Pretty obviously Poindexter and whoever else was, involved didn't have a clue. But, I was sorry they didn't go ahead with it. It didn't sound as if tHey were going to be spending all that much on it. And, I am all for experimental economics, but it is a field that is severely underfunded. Surprisingly, it was back in the Nixon administration that they actually ran an experiment with curing poverty-- they gave people money. Sure enough it seemed to work! Giving poor people money, if you give them enough money, for long enough, does in fact cure poverty. Sort of like my discovery that price increases cause inflation. But, it really did seem to work. Given enough money, poor people acted almost like they were middle class.

Economics really is a strange, I was about to say business, but it really isn't a business.

Bill Williams

26

[From Bill Powers (2004.01.06.1847 MST)]

Bill Williams 6 January 2003 3:30 PM CST--

I think it helps if you consider that, and I hope I've got this right, the
guy who had this idea was Poindexter.

That's the one. Weren't they going to start a market on where terrorists
were going to strike next, or where Osama bin Laden is? Sort of a modern
Ouija board.

Economics really is a strange, I was about to say business, but it really
isn't a business.

I think if we look on the subject (rather than the attempts to understand
the subject) as an example of groups of people trying to control their
lives in the presence of other people, we have as good a chance as
Poindexter, anyway, at coming up with something useful.

Best,

Bill P.

27

[From Bill Williams 6 January 2003 10:30 PM CST]

[From Bill Powers (2004.01.06.1847 MST)]

I think if we look on the subject (rather than the attempts to understand
the subject)...

I would agree that a science starts with a phenomena. Ultimtely it has to. However, once things are underway it isn't neccessary that you do all the work by yourself. And, somewhere down the road if what you are doing is worthwhile, it ought to be communicated.

Before I encountered control theory I had the idea that the Giffen paradox was an anomoly that might provide the clue as to how to over turn orthodox theory. At that point about all I had was a notion borrowed from Veblen that value theory has to do with "a theory of the life process" rather than just supply and demand or financial issues. "The life process," fairly obviously in retrospect involves a hierachical organization of goals. Even Veblen's critics took note that his discussion of value sometimes took an "alimentary" or "nutritive" aspect. REally about all you have to do to "solve" the Giffen paradox, or at least take a step in the direction of solving the Paradox, is drawing the cross between the budget and the caloric line. Once the caloric line is taken seriously, it ought to be apparent that maximization can not provide the right answer to what a consumer must do to maintain life when the price of the inferior or Giffen commodity increases. That, all by itself, as a matter of logic, ought to drive the silver spike through the heart of the orthodox program. But, the orthodox program in economic theory is much more important than a mere question of logic or experimental results. Keynes (1936) said it better than anyone when he described the dominance of orthodox theory as being,

     "...somewhat of a curiosity and a mystery. It must
     have been due to a complex of suitablities in the
     doctrine to the environment into which it was projected.
     That it reached conclusions quite different from what
     the ordinary uninstructed person would expect, added, I
     suppose, to its intellectual prestige. That its teaching,
     translated into practice, was austere and often
     unpalatable, lent it virtue. That it was adapted to
     carry a vast and consistent logical superstructure, gave
     it beauty. That it could explain much social injustice
     and apparent cruelty as an inevitable incident in the
     scheme of progress, and the attempt to change such
     things as likely on the whole to do more harm than good,
     commended it to authority. That it afforded a measure of
     justification to the free activities of the individual
     capitalist, attracted it the support of the dominant
     social force behind authority." (p. 32-33.)

To oppose this sort of thing I think what is needed is a large
enough body of work to create the impression of something that
amounts to an alternative worldview. One aspect of doing this
is to identify, collect and solve a large enough number of anomolies
so that rather than remaining as anomolies the cases are transformed
into exemplars that illustrate the new paradigm. It is not, not at
least in economics anyway, going to come down a question of a
single devestating critique, or a decisive experiement. What is
involved is a matter of both belief and perception-- something
like what psychologists once talked about as the "aperceptive
mass." (When I first encountered the term I thought it must be
some sort of joke, but they were perfectly serious.) What I'm
planning to do is combine two things to create an "aperceptive
mass." One is the legendary heterodox economist Thorstein Veblen
and the other is the spector of micro-biology. Everyones been
aware that orthodox economic theory borrowed from physics. Adam
Smith wrote a book on the Newtonian system, and Samuelson has
borrowed from more contemporary work in physics. But, Marx, Marshall
and Veblen all more or less predicted that economics would eventually
make use of biology. Marx talked about treating man in terms of a
"species being," Marshall said that the economists Meca ought to be
biology, and Veblen argued that economic theory, real economic
theory when it finally arrived, would neccesarily be based upon
"the theory of the life process." So, in a real sense there's been
a background in which the arrival of the new "dispensation" has
been repeatedly foretold-- and by what are some very well known
prophets.

The key to this new dispensation is that we now understand "the
secret of life." When the molecular biologist Jack Monod was being
interviewed by reporters after being awarded a Nobel prize, they
asked him, "When do you think we will learn the scecret of life?"
Monod's indignant reply was "But we already know! By which he
meant life is a control theory type process. And, even a few
psychologists have managed to figure this out. Now, if I can
explain it in a plausible way to economists. It may be a bit of
a stretch, but Veblen seems to have understood, without having the
details in hand, basically what was involved. And, his reputation
I believe is a result of his having employed intutitively a control
theory conception of behavior to arrive at insights-- insights
that once he expressed them, caught the attention of some fo the
best minds of his generation. And, his insights that still attract
favorable attention. But, no one has, as yet provided a good
explaination of how he generated his insights. I'm going to
argue that he got them as a result of anticipating a control theory
conception of behavior. This is will be an entirely unexpected
approach to reading Veblen. Even more unexpected will the
translation Veblen's conceptions into computer programs. (I'm not
entirely sure whether the issue has been decided about whether to
say "model" or "simulation." Bruce Nevin may be correct, but it
seems everyone I read says "model." ) Anyway, I connect Veblen
up with modern biology and the latest conceptions of psychology.
THe following is a sample of the prose.

Ernst Mayr (1982), one of the most prominent evoutionary biologists

of the 2Oth century, states his _The Growth of Biological Thought_

that,

      "To be for or against teleology remained a battle cry
       throughout the nineteenth century and right up to modern
       times.
         Only within the last twenty-five years or so has the
       solution become evident. It is now clear that seemingly
       goal-directed processes exist in nature and are not in
       any way in conflict with a strictly physico-chemical
       explaination. (p. 48.)

Compare Mayr's description of the structural/functionalist

integration that he locates in the mid-195O's to Veblen's

anticipation of this achievement a half century earlier. At

the conclusion of the sequence of lectures "The Preconceptions

of Economic Science" given at Harvard during the academic

year 1899-1900 in which he reviewed the development of the

economist's conception of economic man and economic theory,

Veblen (19OO) states, and it takes him a while to get his point

across, that,

      "All this [criticism], of course, is intended to convey
       no dispraise of the work done, nor in any way to
       disparage the theories which the passing generation
       of economists have elaborated, or the really great
       and admirable body of Knowledge that they have
       brought under the hand of the science; but only to
       indicate the direction in which the inquiry in its
       later phases -- not always with full consciousness --
       is shifting as regards its categories and its point
       of view. The discipline of life in a modern community,
       particularly the industrial life, strongly reinforced
       by the modern sciences, has divested our knowledge of
       non-human phenomena of that fullness of self-directing
       life that was once imputed to them, and has reduced
       this knowledge to terms of opaque causal sequence. It
       has thereby narrowed the range of discretionary,
       teleological action to the human agent alone; and
       so it is compelling our knowledge of human conduct, in
       so far as it is distinguished from the non-human, to
       fall into teleological terms. Foot-pounds, calories,
       geometrically progressive procreation, and doses of
       capital, have not been supplanted by the equally
       uncouth denominations of habits, propensities,
       aptitudes, and conventions, nor does there seem to be
       any probability that they will be; but the discussion
       which continues to run in terms of the former class
       of concepts is in an increasing degree seeking support
       in concepts of the latter class." (p. 176.)

I read what Veblen is saying here as having the same content

as what Ernst Mayr meant when he described the integration

that took place in biology between the structural and functionalist

traditions, an integration that has been carried out by a recognition

that the life process is one which is now being described in terms

of control theory.

My audience has never heard of control theory, let alone Bill Powers,
but they do know about Veblen, and they know, at least from the outside
about molecular biology. So, I start with what they at least know
something about.

Bill Williams

28

[From Mike Acree (2004.01.07.1548 PST]

Martin Taylor 2004.01.05.2355--

The market is the only
arrangement where all transactions are voluntary.

They aren't, except from the viewpoint of those who enter into the
transaction. For everyone else whose ability to control is affected
by the execution of the transaction, the whole thing is totally
involuntary. It is something they are subjected to.

That's why voluntary transactions have to be regulated to ensure that
they don't unreasonably restrict the ability of other parties to
control. In other words, free markets are incompatible with the ideal
that as many people as possible have as much opportunkty as possible
to control their own perceptions.

This strikes me as bizarre.

I buy a bottle of wine for $200. I sell a kidney for $10,000. You may be offended to observe either one of these transactions, just as you may be offended by my hairstyle. But I can't imagine a recipe for greater conflict than to give everyone in the country (in the world?) a say in such dyadic transactions.

Bill Powers (2004.01.06.0658 MST)--

If I give you the choice of complying with my wishes or starving (having
the physical power to limit you to those choices), could your decision to
comply be called "voluntary'?

If you're using your superior physical power to limit my choices to complying with your wishes or starving, you're obviously holding me captive. You seem to be implying that I would defend this as a free-market voluntary transaction; I have no idea why. In my examples above, both buyer and seller offer theother an expanded range of choices, which they can accept or not, leaving them at least no worse off. Under our present system, on the other hand, I'm given the "choice," by people with vastly greater physical power (including weapons), of complying with their wish for me _not_ to sell (or buy) a kidney, or be taken captive. Is that an arrangement you support?

Don't economic and political power
both boil down to physical power in the final analysis?

Not as far as I can see. The fact that somebody has a lot more money than I do doesn't give them any physical power over me--unless there's a government whose agents can be bought, to enact laws against alcohol or kidney sales.

Bill Williams 6 January 2004 9:45 AM CST--

The full myth underlying the notion that economic transactions are voluntary involves >economic agents that supply their own neccesities independent of any social relationship.

I don't know anyone who has said or implied such a silly idea, and I don't know why you introduce it. It is true that if we trace any transaction back far enough, we reach questions about legitimacy--wasn't the land on which the grapes were grown for the wine I bought taken from the Indians? But such questions, however resolved, are common to any economic system; and the Middle East show us how hard it is to resolve such issues going back even just 50 years. But I'm not sure that this was your concern.

There are situations where market solutions are evil. If I was a believer, I wouldn't >want my priest to be a profit maximizer. And, I sure don't want my doctor to be rational >profit maximizer either. And, a profit maximizing general? No thank you! Nor do I want my >policeman to be a profit maximizer.

I differ. The sorry state of police services today is the result of their not being for-profict enterprises--specifically, of the lack of competition and of liability. If we're dissatisfied with an average response time 20 minutes to 911 calls, with the level of police brutality, or with the fact that most crimes go unsolved, we're captive; the police have a legal monopoly. If they arrest innocent persons, or destroy or confiscate their property, no compensation is due; the government has sovereign immunity. The police are of course as greedy as any other humans, and civil asset forfeiture has brought in billions to police departments around the country; but these gains are not profits made in offering services for sale.

Taken altogether, this thread arrays an odd set of arguments. I understand various participants to be saying (a) "There can be no such thing as a free market in principle," and (b) "I'm opposed to letting a free market come about." This juxtaposition is reminiscent of the widely praised argument that started this thread, namely, "Autonomy is a fact, and I want the autonomy of certain people to be encouraged." Bill W. warned us that economics wasn't going to be logical, but this looks to me more like axe-grinding than analysis.

Mike

29

[From Mike Acree (2004.01.07.1550 PST)]

Bill Williams 6 January 2003 3:30 PM CST--

the guy who had this idea was Poindexter. . . .

I wouldn't defend either Poindexter or this somewhat wacky scheme, but there is an interesting kernel of truth here. Evidently (I don't have the reference handy) markets do quite well in predicting certain events like elections. The last several Presidential elections (all those since the practice was started) were predicted within a point or two, I believe, in contrast to the performance of the polls. No great mystery here, I suspect: People can say anything in polls, for a variety of reasons, when they're not staking their shirt on anything; prices of various bets, like those in any market, integrate the disparate information and impressions of a wide variety of participants.

A miniature example of something like this already happened in connection with 9/11, as you probably know. Around 9/20/01, the San Francisco _Chronicle_ reported that put options worth millions had been placed on United and American airlines, and no others (These were essentially bets that the stock would go down.) in the week before 9/11. _The New Yorker_ subsequently reported that the bank which had placed the options was headed until 1998 or so by A. B. Krongard, who left that position to become #3 in the CIA. I never saw any follow-up to the story.

In general, I would expect a mrket like this to work poorly for predicting terrorist events, unless the terrorists are as foolish and greedy as Krongard's bank, tipping their hand with bids large enough to have a discernible effect on prices.

Mike

30

[From Bill Williams 7 January 2003 6:44 PM CST]

Mike,

Like I said, I was sorry they didn't go ahead with the "Futures in Terriorism" scheme. And, there is as you say an element of validity in the idea, though maybe not very much in the particular scheme that was described.

A miniature example of something like this already happened in connection with 9/11, as you probably know. Around 9/20/01, the San Francisco _Chronicle_ reported that put options worth millions had been placed on United and American airlines, and no others (These were essentially bets that the stock would go down.) in the week before 9/11. _The New Yorker_ subsequently reported that the bank which had placed the options was headed until 1998 or so by A. B. Krongard, who left that position to become #3 in the CIA. I never saw any follow-up to the story.

I hadn't heard about this. A very interesting story.

By-the-way, I am not anti-market in principle, just critical of arguments that markets provide the _only_ solutions to economic problems.

Bill Williams

31

[Martin Taylor 2004.01.07.2104]

[From Mike Acree (2004.01.07.1548 PST]

Martin Taylor 2004.01.05.2355--

The market is the only
arrangement where all transactions are voluntary.

They aren't, except from the viewpoint of those who enter into the
transaction. For everyone else whose ability to control is affected
by the execution of the transaction, the whole thing is totally
involuntary. It is something they are subjected to.

That's why voluntary transactions have to be regulated to ensure that
they don't unreasonably restrict the ability of other parties to
control. In other words, free markets are incompatible with the ideal
that as many people as possible have as much opportunkty as possible
to control their own perceptions.

This strikes me as bizarre.

I buy a bottle of wine for $200. I sell a kidney for $10,000. You
may be offended to observe either one of these transactions, just as
you may be offended by my hairstyle. But I can't imagine a recipe
for greater conflict than to give everyone in the country (in the
world?) a say in such dyadic transactions.

A bizarre response, indeed!

In what way is my ability to control affected by your buying the wine
or the kidney? But it would be affected if you bought the attention
of the police who might otherwise be protecting my house. I don't
want you doing that!

The general statement is that the intended effects of any control
action are to affect a controlled perception, but the side effects
affect many other perceptions and alter many other environmental
feedback paths. If you buy some waterfront property and put an
apartment building on it, I can't enjoy the beach.

"That's why voluntary transactions have to be regulated to ensure
that they don't unreasonably restrict the ability of other parties to
control."

If you want to argue the point, try to say something germane to the point.

Martin

32

[From Bill Williams 7 January 2003 9:00 PM CST]

Mike,

Bill Williams 6 January 2004 9:45 AM CST--

The full myth underlying the notion that economic transactions are voluntary involves >economic agents that supply their own neccesities independent of any social relationship.

I don't know anyone who has said or implied such a silly idea, and I don't know why you introduce it.

The "silly" idea is known as the "social contract" theory of society. It is a standard 18th century explaination of the relationship between "individuals" and "society." Traces show up in Adam Smith's discussion of the origins of trade, in Book I chapter IV where he starts by saying,

     "In that early and rude state of society which precedes both
       the accumulation of stock and the appropriation of land, ...

(The electronic copy I pulled the passage from doesn't supply page numbers.}

What Smith is talking about here is a state of society in which there is no ownership of land and no capital. All that there is, so far as factors of production are concerned, is labor. Smith goes on to say that commodities trade on the basis of the hours of labor required to produce the commodities. There are some inconsistencies in the tale, but consistency wasn't exactly Smith's strong point and the element that Veblen described as "graceful misinformation" wasn't seen as a fault by Smith's audience. It was a common feature in the formative stages in efforts to develop economic and social theory. The method involved was to imagine, per impossible, the pre-history of human experience in terms of a "state of nature", a state that is prior to the formation of society. Then work out the transition process in which "individuals" come to gather and rationally decide by way of a "voluntary" contract to create a society. Obviously, nothing like this actually ever happened, but that wasn't the point. The point was to create a conception of society that would be more favorable to industry and trade than the prevailing notions which were partly the decayed remains left over from feudalism. As a part of the transition to an industrial and commerical order, the myth's regarding mankind existing, somehow, in the absence of society, and the fable that followed more or less served the intended purpose. These tales, however, have been retained in orthodox economic theory, where they are being used to a very different effect-- the result is a situation in which mythical conceptions about things such as the orthodox specification of Economic Man are taken for something approximately like a reality.

  Closer to today, Veblen in

Thorstein Veblen "Why is Econmics not an Evolutionary Science?"
The Quarterly Journal of Economics
Volume 12, 1898.

complains about Alfred Marshall, the Paul Samuelson of his day, retaining the not so harmless misinformation, such as,

   "As instances of the use of this ceremonial canon of knowledge
    may be cited the "conjectural history" that plays so large
    a part in the classical treatment of economic institutions,
    such as the normalized accounts of the beginnings of barter
    in the transactions of the putative hunter, fisherman, and
    boatbuilder, or the man with the plane and the two planks,
    or the two men with the basket of apples and the basket of
    nuts.4

       4. Marshall, Principles of Economics (2nd.),
           Book V, chap. ii, p. 395, note.

The common feature of these "conjectural histories" is the assumption of an initial state of things that is prior to trade. The point of the exercise is to develop an analysis of the motives to trade starting from zero. These tales aren't constructed with a great deal of precision, and when we read the 18th century, and 19th too for that matter, there has to be an element of reading into what is said. So, how would you explain, how these conjectural economic agents maintain existence prior to trade if they are not self-supporting individuals? I'm, of course not the one who generated these fables that lie only slightly hidden beneath the structure of contemporary orthodox economic theory.

Why did I bring up the matter of the assumptions that underly contemporary orthodox economic theory? Well, as I understand it, you've made an argument that PCT and HPCT provide some support for some positions you hold concerning human nature, the realities of the marketplace, justice and so forth. As I said, Bill Powers can speak for himself in regard to PCT, and HPCT. I'll argue, to repeat myself, that as best I can see control theory provides the basis for what may be the decisive critique of the positions I understand you to be advocating not further support for those positions.

Now it seems to me that you've confused things a bit. It doesn't appear to me that it is my argument that is as you say "silly." Rather, it is the argument of the orthodox economists from Smith, through Marshall, and down to the texts that are used everyday today in economics classes, that you are describing as "silly." What I've done is pay my dues and familiarized myself to some extent with the orthodox economic theory. I'll quote Veblen to the effect that I shouldn't be blamed if the foundations and arguments of orthodoxy are somewhat deficient.

Veblen, Thorstein 1908 "Professor Clark's Economics" Quarterly Journal
of Economics Volume 22 Issue 2 Feburary p 147-195.
  pages from _The Place of Science_ reprint

         "All the analysis and reasoning here set forth has an air
       of undue tenuity; but in extenuation of this fault it should
       be noted that this reasoning is made up of such matter as
       goes to make up the theory under review, and the fault;
       therefore, is not to be charged to the critic. The manner of
       arguement required to meet this theory of the "natural law
       of final productivity" on its own ground it itself a
       sufficiently tedious proof of the futility of the whole matter
       in dispute. Yet it seems necessry to beg further indulgence
       for more of the same kind." (p. 21O.) Place of Science
                                   (p. 176.) Quarterly Journal

A bit later Veblen goes on to say,

     "It is a long time since puerility or absurdity has been a bar
     to any suposition in arguments [regarding orthdox economics]. "
      footnote (p. 225.) _Place of Science_

Veblen's critique of Clark was published amost a hundred years ago.

There are situations where market solutions are evil.

I differ.

So, I guess you wold be in favor of re-installing slave markets?

Taken altogether, this thread arrays an odd set of arguments.

This I can agree to.

I understand various participants to be saying (a) "There can be no such thing as a free market in principle," and

But, of course! Evidently we are communicating to some extent.

(b) "I'm opposed to letting a free market come about."

I'm not worried about this since the whole idea of a "free market" is a contradiction in terms.

This juxtaposition is reminiscent of the widely praised argument that started this thread, namely, "Autonomy is a fact, and I want the autonomy of certain people to be encouraged."

I don't see the original statement to be absurd. "Autonomy" as I understand it can be exercised with more or less effectiveness, and to varying degrees. So, I'll rewrite the statement, as "Autonomy is a fact, and I'd like to help people understand how to exercise their autonomy better."

Bill W. warned us that economics wasn't going to be logical, but this looks to me more like axe-grinding than analysis.

I think what I said, was that "Economics has often been carried on in ways that have ignored logic and matter-of-fact considerations." That is I think beyond question, or it ought to be. Whether it is carried on in the future in a manner that is more observant of logic and matter-of-fact is at least formally a question that only the future can answer. My expectation is that, in large part, the future is going to be much like the past.

My fundamental complaint against orthodox economic theory is that it is a scheme of thought in which there is _only_ one good. The foundation of neo-classical economics is the principle of maximization. In order to maximimize the value commodities under consideration have to be measurable in terms of a single commensurable standard-- that is in terms of one measure of the good. I just don't happen to think that human civilization is made up so that it will work properly when everything is for sale. I don't happen to think that everything either is, or should be, treated as a commodity. Priests ought to be concerned with sacred things not price tags. Police ought to be concerned about law and order, not the size of their "take." Generals, some of them at anyrate, ought to hope for glory-- not a cushy payoff from a defense contractor.

When I was 11 or 12 and I was standing outside a school in New Port News Virginia, I noticed an F-100 approaching very quietly at what seemed to me to be a very odd angle. I was always interested in airplanes, and this one was only a few hundred yards away and I was looking up the intake, a view I'd never experienced before. I'd seen an F-100 crash not long before-- the early version had an engine that wasn't fully sorted out. It quickly became obvious that the F-100 was going rather slowly, but before I could figure out what was that seemed so strange, the F-100 raised its nose slightly, floundered over the school, and splashed into the James river bay. Rather than ejecting when he could, the pilot had stayed with the aircraft after the engine flamed out and died after guiding it into the bay rather than permiting what was in effect a very large container of napalm to drop on a residential district, a school, and for that matter me.

In a world in which everyone lived according to a set of homogenous preference functions, and the principle of maximization I wouldn't be here. Fortunately for me, the pilot behaved according to a very different set of axiological principles-- principles which admittedly sometimes have the defects of their qualities. One of the profounder things that I think a control theory conception of human nature and behavior can do is support is a conception of civilization in which it is possible to think that there is more than one kind of worth. If we allow that it is possible that there is more than one kind of worth, then it is possible, and even potentially rational to think that the pilot that guided the F-100 into the bay wasn't neccesarily a fool.

Bill Williams

Talking to colleages about the thread, one of them suggested that people interested in such issues ought to read, Steve Keen's 2OO1 _Debunking Economics: The Naked Emperor of the Social Sciences_ Anandale, Australia: Pluto Press After looking at it, I decided _I_ ought to read it.

33

[From Bill Powers (2004.01.08.0845 MST)]

Mike Acree (2004.01.07.1548 PST)

You and Bill W. are doing fine on this thread, but I do have one comment.

I buy a bottle of wine for $200. I sell a kidney for $10,000. You may be
offended to observe either one of these transactions, just as you may be
offended by my hairstyle. But I can't imagine a recipe for greater
conflict than to give everyone in the country (in the world?) a say in such
dyadic transactions.

While soaking someone $200 for a bottle of wine seems sort of morally
neutral to me, the other transaction seems less so. You failed to mention
that someone had $10,000 and thus was able to buy a kidney, so someone
without any spare money couldn't have it. I don't think it is morally
neutral that such things should be determined by wealth..

Best,

Bill P.

34

[From Mike Acree (2004.01.08.1018 PST)]

Martin Taylor 2004.01.07.2104--

If you want to argue the point, try to say something germane to the point.

I _was_ trying, but our difficulties in communicating on this subject are remarkable.

They aren't, except from the viewpoint of those who enter into the
transaction. For everyone else whose ability to control is affected
by the execution of the transaction, the whole thing is totally
involuntary. It is something they are subjected to.

That's why voluntary transactions have to be regulated to ensure that
they don't unreasonably restrict the ability of other parties to
control. In other words, free markets are incompatible with the ideal
that as many people as possible have as much opportunkty as possible
to control their own perceptions.

This strikes me as bizarre.

I buy a bottle of wine for $200. I sell a kidney for $10,000. You
may be offended to observe either one of these transactions, just as
you may be offended by my hairstyle. But I can't imagine a recipe
for greater conflict than to give everyone in the country (in the
world?) a say in such dyadic transactions.

A bizarre response, indeed!

In what way is my ability to control affected by your buying the wine
or the kidney? But it would be affected if you bought the attention
of the police who might otherwise be protecting my house. I don't
want you doing that!

The general statement is that the intended effects of any control
action are to affect a controlled perception, but the side effects
affect many other perceptions and alter many other environmental
feedback paths. If you buy some waterfront property and put an
apartment building on it, I can't enjoy the beach.

You are the one who made the point that dyadic transactions may affect the ability of others outside the transaction to control some of their perceptions, and concluded from that that such transactions should be subject to "regulation." I was agreeing with the first point in offering the examples of wine and kidney, but challenging the implication that outside parties should therefore be brought into the transaction. You appear to be responding by denying that outside parties are involved in the wine and kidney transactions--which appears to me to contradict your initial claim. You then repeat this claim with an example of your own.

My best guess at this point about what you mean to be saying is that _some_ dyadic transactions affect the ability of outside parties to control some of their perceptions (your beach example, but not my wine or kidney example), and that _these particular_ transactions need to be regulated; and I've misread you as arguing that dyadic transactions _in general_ should be regulated. If that's the case, we don't have much of a disagreement to pursue. My own approach would be not to worry about trying to classify transactions a priori, to agree in principle that any dyadic transaction (or individual behavior or characteristic, like my hairstyle) _may_ have effects on others requiring compensation, and to let these be worked out on a casewise basis. So, for example, if Bill P. is offended by my selling a kidney for $10,000, he could sue both of us for the emotional trauma of observing or reading about this transaction. In this case I would expect an arbitration agency concerned!
  to protect a reputation for fairness to make no more than a trivial award, not enough to cover Bill's costs. My blocking your ocean view with my new apartment building, on the other hand, has material consequences for the value of your property which can be estimated. It will generally be in my interest to negotiate a compensatory payment in advance, lest a post facto award be more than I want to pay.

I draw attention to the fact that my approach here is based on negotiation, consistent with MSOB, whereas "regulation" sounds to me unilateral, a priori, and nonnegotiated.

Are we anywhere close to being on the same page, or even in the same book?

Mike

35

[From Shannon Williams (2004.01.08.1300 CST)]

[From Bill Powers (2004.01.08.0845 MST)]

I don't think it is morally neutral that such things should be

determined by wealth..

But if you believe that those who do not have wealth are either lazy or
stupid or have made the choice not to have wealth, then all transactions
can be morally neutral for you.

Perhaps that is why the reference of 'Voluntary' was so important to Rand.
Funny though, there is no physical test or definition of 'Voluntary'. It
does not exist except in someone's head.

36

[From Rick Marken (2004.01.08.1055)]

Mike Acree (2004.01.08.1018 PST)--

Are we anywhere close to being on the same page, or
even in the same book?

I think this discussion would be much more interesting -- and much more
likely to keep everyone on the same page -- if someone would post a dynamic
model of a market, preferably a market in which the agents (buyers and
sellers) are control systems. Then we could talk about the merits of "free"
and "regulated" markets in the context of a working model that shows what
the relevant variables are and how they interact. Indeed, the model would
help me understand what "free" and "regulated" mean when we are talking
about markets.

I'll try to work on this myself but I don't have much time at the moment.
I'd really like to see a control system agent-based model of a market. It
doesn't seem like it would be that hard to build such a model. But, easy or
not, it seems like such a model could improve communication on this topic
substantially.

Best

Rick

···

--
Richard S. Marken
MindReadings.com
Home: 310 474 0313
Cell: 310 729 1400

37

[From Mike Acree (2004.01.08.1119 PST)]

Bill Williams 7 January 2003 9:00 PM CST--

I don't know anyone who has said or implied such a silly idea, and I don't know why you >>introduce it.

The "silly" idea is known as the "social contract" theory of society. It is a standard >18th century explaination of the relationship between "individuals" and "society."

Ok. I confess I was thinking about contemporary economists; you are quite right that a characteristic 18th-century approach was to try to trace everything back to a hypothetical and quite arbitrary origin.

That said, I think it can be useful, in developing economic theories, to consider the simplest, barter economies. The institution of money, in particular, has so many layers--from a medium of exchange to fractional-reserve banking, fiat currencies, M1 and M2, and I don't know what else--that it is hard to begin the task of understanding economics by assuming all of these in place. But I don't see even a primitive, barter economy as entailing the assumption of atomistic individualism. Even the hunt was usually a cooperative endeavor. I'm quite prepared to believe, however, your claim that residues of this atomistic vision remain in the contemporary fiction of Economic Man; I'm out of my depth.

Now it seems to me that you've confused things a bit. It doesn't appear to me that it is >my argument that is as you say "silly." Rather, it is the argument of the orthodox >economists from Smith, through Marshall, and down to the texts that are used everyday today >in economics classes, that you are describing as "silly." What I've done is pay my dues >and familiarized myself to some extent with the orthodox economic theory. I'll quote Veblen >to the effect that I shouldn't be blamed if the foundations and arguments of orthodoxy are >somewhat deficient.

Yes, by all means, it was the atomistic individualism, and not your reference to it, that I was characterizing as silly.

There are situations where market solutions are evil.

I differ.

So, I guess you wold be in favor of re-installing slave markets?

I can't see that as a serious comment. I'm the only one on this list who has consistently opposed all nonconsensual relationships such as slavery. Several people have argued explicitly in favor of taxation.

the whole idea of a "free market" is a contradiction in terms.

That remains to be demonstrated.

"Autonomy" as I understand it can be exercised with more or less effectiveness, and to >varying degrees. So, I'll rewrite the statement, as "Autonomy is a fact, and I'd like to >help people understand how to exercise their autonomy better."

I still think "autonomy" is being used in this sentence in a sense different from that used by Marken when he says (and I agree) that in PCT "autonomy is a fact." But I don't have anything further to say about it.

My fundamental complaint against orthodox economic theory is that it is a scheme of >thought in which there is _only_ one good. The foundation of neo-classical economics is the >principle of maximization. In order to maximimize the value commodities under >consideration have to be measurable in terms of a single commensurable standard-- that is >in terms of one measure of the good. I just don't happen to think that human civilization >is made up so that it will work properly when everything is for sale. I don't happen to >think that everything either is, or should be, treated as a commodity. Priests ought to be >concerned with sacred things not price tags. Police ought to be concerned about law and >order, not the size of their "take." Generals, some of them at anyrate, ought to hope for >glory-- not a cushy payoff from a defense contractor.

This is an interesting paragraph. You seem to be saying that you see economics as a normative, rather than an empirical, enterprise. It seems to me an empirical question whether everything is indeed for sale. (You remember the famous joke along these lines.) But it seems to me an obviously false and unnecessary assumption that nobody is concerned with anything except money. It would seem an inadequate theory of economics that was invalidated if some generals (or pilots) went for glory rather than money.

Mike

38

[Martin Taylor 2004.01.08.1426]

[From Rick Marken (2004.01.08.1055)]

Mike Acree (2004.01.08.1018 PST)--

Are we anywhere close to being on the same page, or
even in the same book?

I think this discussion would be much more interesting -- and much more
likely to keep everyone on the same page -- if someone would post a dynamic
model of a market, preferably a market in which the agents (buyers and
sellers) are control systems.

That would be good, but it would be hard in such a model to
incorporate the broadcast effects of individual transactions--the
ones that have trivial effects individually on people not involved in
the trasnaction, but that cumulatively have enormous effects on their
abilities to control, either through disturbances or through
alterations of the environment around them.

I mean the kind of effects that Mike Acree would like to solve by
having the several million affected people each individually pay
lawyers and judges to pursue a suit against the people that
voluntarily entered into each of these thousands of transactions.

I think your model ought to include lawyers and judges, and nobody
else, because there wouldn't be time for anyone to do anything else
but pursue lawsuits :slight_smile:

Martin

39

[From Mike Acree (2004.01.08.1148 PST)]

Rick Marken (2004.01.08.1055)--

I don't have any time, either, and am getting myself into big trouble by responding to more posts than I can keep up with. But I might as well take this occasion to make a comment on Bill's Test Bed proposal. In fields as tangled and muddled as economics, I'm very much in favor of starting out from scratch, rethinking the assumptions, which is what I take the intention here to be. But imagine the following scenario: A psychologist announces that he wants to do that in psychology, and he will proceed by constructing more elaborate and complex models than have been feasible before the era of superduper computers. There will be measurements of all sorts of biological, psychological, and social variables, on many thousands of individuals, and the model will link their averages on all of these variables. Structural equation modeling will be used to test, for example, whether biological variables affect psychological variables or vice versa. With sufficiently sophisticated !
software, we can allow nonrecursive (reciprocal) causal relations. The ultimate result will be a complete model of human behavior.

I can't tell you how many grant proposals I've read that sounded just like that, except with hundreds rather than thousands of participants. I take it as obvious to PCTers that psychological and biological processes do not operate on the averages of arbitrary aggregates of individuals, and that all the various multiple regression coefficients are going to be meaningless, in terms of understanding what is going on.

from the incipient descriptions, I worry a little that something like this is what the Test Bed may do--particularly if it starts from the common assumption that economics, like psychology, is about understanding aggregates and averages of quantities that can be numerically measured (depression, glory, or my desire for a kidney). I see a real risk of incorporating some of the troublesome assumptions that Bill W. has been warning about, among others.

That said, I don't really want to rain on anybody's parade before it even gets started, so I'll leave my concerns at that.

Mike

40

[From Mike Acree (2004.01.08.1209 PST)]

Martin Taylor 2004.01.08.1426--

I mean the kind of effects that Mike Acree would like to solve by
having the several million affected people each individually pay
lawyers and judges to pursue a suit against the people that
voluntarily entered into each of these thousands of transactions.

I had already pointed out in the post to which you were responding:

if Bill P. is offended by my selling a kidney for $10,000, he could sue both of us for the >emotional trauma of observing or reading about this transaction. In this case I would >expect an arbitration agency concerned to protect a reputation for fairness to make no more >than a trivial award, not enough to cover Bill's costs.

and further that

It will generally be in my interest to negotiate a compensatory payment in advance, lest a >post facto award be more than I want to pay.

Hence I see no basis for your remark. It is our present system, on the contrary, which subsidizes lawsuits in various ways, as documented, for example, in Philip Howard's _The Death of Common Sense_ or Walter Olson's _The Litigation Explosion_.

I'll cop to coming from a position on some issues that is radically different enough to make it difficult for some people to get their heads around. Beyond that, I'm not sure why my posts attract such cheap shots. That hardly makes them unique in this forum, but it doesn't make for a very reinforcing (:-)) exchange. Is that perhaps the point?