In praise of hierarchies

In which your humble correspondent has a minor disagreement with Chris Dillow.

Blogging titan Chris Dillow does not like managers.

As you would expect from such a luminary, Chris’s reasons for disliking the Boss Class are astute and well-thought-out:

The pursuit of efficiency – managerialism’s main goal – cannot be a value-free exercise. “Efficiency” has many conflicting meanings. Does it mean increasing GDP per head, Pareto-optimality, utilitarianism, maximizing Rawlsian primary goods or maximizing capabilities, in Amartya Sen’s sense? How do we choose a meaning of efficiency from this menu? And if we choose utilitarianism (as managerialism often does) what is the moral justification for imposing costs on some – up to and including death, Mr Hoon – so that others can gain?

Chris makes the important distinction between managerialism and management. Managerialism is the ideology of the managerial class, and as such is the ruling ideology of our age. Management, or technocracy, is the application of science to the problem of achieving certain ends given certain resources, and is therefore a branch of engineering*.

I disagree with Chris that all top-down management is harmful. My reasons for thinking this are as follows.

An industrial society requires specialisation. Our world is too complex for one individual intellect to encompass any more than a tiny fraction of it in any depth. In order to function, our industrial society requires that people specialise and develop expertise in particular areas. We need teachers, nurses, paramedics, electrical engineers, baristas, taxi drivers, geologists, science fiction writers, booksellers, economists, entertainers, and economics bloggers. No one (contra Heinlein) can learn how to excel in every one of these areas.

Specialisation requires informational transfer. Individual people, with their individual specialisations, need a way of communicating. It is only through communication that these individual experts will be able to co-ordinate, and it is only through co-ordination that they will be able to deliver the products, projects, and services that we desire.

How is this co-ordination to be achieved? There are two broad answers to this question. One is hierarchy, and the other is… Something. I’m not going to say ‘markets’ because I’m fed up with that word. Call it decentralised co-ordination.


I know what a hierarchy is. I understand what a hierarchy is. It is a situation in which one person is vested with authority, and this authority entitles them to tell other people what to do, and it requires that those people do actually do what the first person tells them to do (within various limits and subject to various contextual caveats yaddah yaddah…).

But what is a market?


At this stage a market might as well be an invisible unicorn that grants magical wishes, or a pair of intersecting lines on a page of a textbook, or a place you go to at weekends to buy overpriced honey with bits of honeycomb left in it. I honestly don’t know any more. “The market” means so many things to say many different people that I give up on trying to understand it.

So instead of market, I will use the term decentralised co-ordination. This encompasses a much broader set of behaviours than just whatever markets are taken to be. When motorists are traversing a roundabout they are engaging in decentralised co-ordination. The crowds who walk down Oxford Street are engaging in decentralised co-ordination when they avoid bumping into each other (most of the time).


De-centralised co-ordination has a problem. This problem is best illustrated by an example. Suppose we want to build an aeroplane. This is a complex task and therefore requires specialisation. Specialisation requires co-ordination. Co-ordination requires communication. The problem is that within a completely  decentralised system of co-ordination each individual would have to communicate with each other individual. This results in a combinatorial explosion in the amount of communication that has to go on.

If you have, say, 300 engineers working on the design, manufacture, and commissioning of your aeroplane then, in a completely decentralised situation, each engineer would have to engage in 300! interactions (that’s factorial 300) in order to co-ordinate her individual efforts with her fellow engineers.

How much is 300 factorial? If we assume that each interaction will be a “brief chat”, how many “brief chats” will our engineers have to engage in so as to design, manufacture, and commission our aeroplane?

According to Wolfram Alpha, about this many:











Wow. OK.

So, what do we do?

A far more sensible option is to divide the engineers into functional groupings and have each group sub-divided into smaller groups, where each group reports to one particular engineer who digests their information and then passes it up the chain, whilst receiving instruction from those above based on what she has told them; in other words, a hierarchy.

If we have one engineer at the top of the chain, and if she has seven engineers reporting to her, and they have seven engineers reporting to each of them, and they have seven engineers reporting to each of them… we end up with a potential capacity of 1 + 7 + 49 + 343 engineers. What are the total number of “brief chats” required now?

Well let’s see, we have one to seven, then each one of those seven to seven, then each one of those seven to (substantially less than) 343.

So it’s 7 to the 4 right? That’s how many brief chats are going to have to take place. Which according to Wolfram Alpha is:


Which is a lot, yeah? But a lot less than we’d be dealing with if we expected our engineers to communicate on a completely non-hierarchical basis. Two thousand four hundred and ten is a tractable number. You can do business with that kind of number.

This is why hierarchies exist. They are more informationally efficient than non-hierarchies. We have managers because if we didn’t, we couldn’t have cheap flights, we couldn’t have a nuclear deterrent, we couldn’t have the Internet, we couldn’t have electricity. We couldn’t have almost all of the goods and services afforded by our wonderful industrial society.

Bosses exist for a reason; if we didn’t have them, we’d have to create them. Or live in mud huts and grow all our own food.

This may sound strange. Many people think of hierarchies as barriers to communication. We see them as controlling, fusty, bureaucratic, and inefficient.

But really they’re not. Like democracy, hierarchies are the least bad solution to the problem they are intended to solve.


Some guy on Twitter disagreed with my disagreement with Chris. So what about Kaizen? Well Kaizen is all very well. But the other pillar of the Toyota production system is something called Just In Time. JIT is not a system that spontaneously arose because of the self-interested actions of atomistic individuals working as equals. JIT requires enormous amounts of discipline, morale, and managerial gumption to implement in the first place, and then requires that workers maintain that level of discipline consistently for a long period of time.

So how does one ensure that the workers maintain that level of discipline? Whose responsibility is it to ensure the workers are kept in line?

Well, the bosses, of course.

Once again, the question devolves to an issue of who benefits. Are workers better off for being corralled and controlled? Are the fruits of hierarchical, specialised industrialisation such that workers are – on the whole – better off for being managed? I honestly don’t know.

The real problem here is…


Chris has a point. Left Outside has a point. Hierarchies lend themselves to rent-seeking and power-grubbing. Here’s a points from Left Outside:

I’m thinking more along the lines of avoiding bad news, important people overriding the more knowledgeable.

This happens. But I submit that this will happen in basically any situation involving human beings ever. This is a problem of power, not hierarchy, per se. The problem, as ever, is politics. It is about the morality of the right of some people to dictate to others, as opposed to the effectiveness of the right of some people to dictate to others.

Kaizen is a good thing to have, but it only works if you treat your employees with respect. I don’t know what ‘respect’ means in this context. Some people would argue that demanding that people work for a capitalistic enterprise is inherently disrespectful, but there you are.

Bosses are always going to exist. I’d rather they were all elected by their peers, rather than being appointed by our capitalist overlords; but the fact remains they are necessary. Any socialist utopia worth living in will have bosses, because any socialist utopia worth living in will need the kinds of products, projects, and services that can only be provided by hierarchical organisations.


Like any technology, hierarchy can be used for malicious and anti-social purposes. But that doesn’t mean the technology is intrinsically harmful or that it isn’t worth using in the first place.

*Chris calls technocracy a practice, in the sense used by Alasdair MacIntyre.

Why do people care so much about inflation?

Economists are fond of asking this question. Why do people care so much about inflation? Nick Rowe does it here, Noah Smith does it here. From Nick Rowe:

A lot of non-economists believe the inflation fallacy. I’m an expert on what non-economists think about economics. That’s because I have spent the last 30 years trying to teach non-economists how to think about economics.

Sometime in February, I will ask my ECON1000 students: “So, why is inflation a bad thing?”

I can anticipate the look on their faces. Some will give me that look of sympathy, normally reserved for those who aren’t too bright. Others will look like they know this must be a trick question, since I wouldn’t ask anything that were really quite so obvious. Finally one will answer.

“Because if all prices rise 10% we will only be able to afford to buy 10% less stuff. Duh!” Except the “Duh!” is silent.

That’s the inflation fallacy.

Why is the inflation fallacy a fallacy?

Apples bought must equal apples sold. What is an expenditure to the buyer of apples is a source of income to the seller of apples. Every $1 rise in the price of an apple means the buyer is $1 poorer and the seller is $1 richer.

But there’s a problem with Rowe’s argument; in fact, it’s a problem that crops up again and again in economics: wilful obtuseness on matters of politics. Economists want so much to be an a-political ‘scientific’ discipline that they’d rather sit around being smart-arses and saying stuff like: “if all prices double, and all wages double, that would have no effect on the quantity of labour demanded,” than actually addressing what actually concerns people about inflation.

When people say they are “worried about inflation” what they actually mean is that they are “worried that their real wage will be eroded because commodity prices rise faster than their wages.” Inflation is a worry because it represents one (very effective) way of bosses reducing workers’ wages and increasing profits without the workers being in a position to do anything about it.

If unemployment is high and unions are weak – as is currently the case in the UK – then workers are not in a position to demand rises in their real wage, so commodity inflation represents a threat. 

Now, as Smith argues, there are good reasons to think that the ‘best’ situation is one of moderate, positive inflation; but that necessary upward price adjustment cannot occur simultaneously across all sectors of the economy. Someone has to move first. So the question arises: who shall bear the short term burden of differential price rises, workers or firms?

There has been a great deal of opposition to fiscal stimulus because it is claimed that fiscal stimulus will lead to inflation. This is obviously wrong in the present situation of high-unemployment, because if there is excess capacity in the economy (and what is unemployment but excess capacity?) then using some of that extra capacity will not necessarily result in inflation.

But warnings of inflation are a very effective tool for cowing the masses into doing what the ruling class wants. The ruling class want weak trade unions, low inflation, and a high profit share out of total income. The masses ought to want a high wage share out of total income, strong trade unions, and moderate inflation. Insofar as a trade-off exists between unemployment and inflation the masses ought to prefer a situation of full employment and moderate inflation, over a situation of high unemployment and low inflation.

But there are many cognitive biases that exist to prevent the masses from expressing a rational preference. Although people fear unemployment, even in the worst economic situation, the majority of people remain employed. Unemployment is awful for the people experiencing it, but those people are only ever one small fraction of the total working population. But inflation is experienced by everyone in the working population.

The salience effect leads people to overweight the importance of things that are in front of them. People spend more time shopping and looking at rising commodity prices (especially of big-ticket items like petrol) than they do looking at unemployment figures. The just world fallacy and fundamental attribution error leads people to blame individual unemployed people for being unemployed, rather than blame the impersonal economic forces that are actually its cause. As George Orwell writes in The Road to Wigan Pier, this can even lead people to blame themselves:

When a quarter of a million miners are unemployed, it is part of the order of things that Alf Smith, a miner living in the back streets of Newcastle, should be out of work. Alf Smith is merely one of the quarter million, a statistical unit. But no human being finds it easy to regard himself as a statistical unit. So long as Bert Jones across the street is still at work, Alf Smith is bound to feel himself dishonoured and a failure.

On the other hand, if the supermarket jacks up the price of petrol, I – and many others – are far more likely to demand that Something Must Be Done; and we are more likely to be listened to, because petrol prices affect more people, and their impact is more immediate and obvious than that of unemployment.

In summary: anti-inflation policy is a wedge issue that enables the rich to persuade the poor to vote against their own interests. I have no idea what to do about this.

Some distinct arguments in favour of free markets

What follows is a list of arguments in favour of free markets. I have made no attempt to critically analyse each argument, as my intention is merely to present and label various arguments so that I can refer to them at a later date.

It should be noted that many arguments in favour of free markets present markets in opposition to some alternative, usually something called ‘central planning’.  This opposition strikes me as a false dichotomy, as it is entirely possible to imagine a system that incorporates some elements of central planning with some elements of markets. In fact, we don’t have to imagine such a system because we actually live in one; the real world of economic activity is characterised by an intermingling of central planning (e.g. within firms and governments) and market systems (e.g. between firms, households, and sole traders).

Anyway, without further rambling, I present the arguments…

Markets as disciplined pluralism

In The Truth About Markets John Kay argues that what makes markets really useful is that they allow for what he calls ‘disciplined pluralism.’ Markets are pluralistic because they allow people to ‘propose’ different projects, usually in the form of business ventures. Markets are disciplined because if these business ventures provide goods or services that are not in demand then the business will fail, and the resources used by that business will be allocated elsewhere.

Kay distinguishes the disciplined pluralism of the markets with the lack of discipline and pluralism one often finds in government-controlled enterprises. Because governments wield a monopoly on the legitimate use of violence, government-supported projects can survive long after they have been shown to be inadequate or wasteful. Kay illustrates this point with examples like Concorde and the British AGR nuclear power stations. Both of these ‘white elephant’ projects cost billions of pounds and survived long after a private company would have gone bankrupt.

Furthermore, Kay argues, governments tend not to be pluralistic; they encourage industries to speak in ‘one voice’, or simply ignore alternative viewpoints altogether, with the result that potentially good ideas are not given a fair hearing.

Disciplined pluralism means markets act as filters, allowing good ideas to pass through and spread, whilst suppressing bad ones. This pro-market argument explains how markets provide for dynamic efficiency in the form of innovation, invention, and technological progress. Good innovations are rewarded with increasing market share, and bad innovations are allowed to fail.

Markets as aggregators of tacit knowledge

‘Tacit knowledge’ or ‘tacit knowing’ is a theory introduced by the polymath Michael Polanyi. It denotes the idea that a great deal of our day-to-day knowledge is deeply personal, intuitive, and cannot be reduced to a set of written or spoken propositions. Friedrich Hayek applied this concept to economics, and argued that much economic activity relied on this kind of in-expressible knowledge; and for so no central planner could ever hope to co-ordinate economic activity, because the central planner could not express the commands necessary to instruct people to do what they needed to do.

Markets provide a solution to this problem. Individuals no longer have to communicate explicit instructions for everything every other individual has to do. Instead, individuals use the price mechanism of the markets to transmit information between themselves.

Markets as systems of co-operation

In The Market System Charles Lindblom characterises the market system as a tool that enables co-operation. This notion has something in common with the idea that markets aggregate tacit knowledge. I discussed Lindblom and his book in more detail in this post.

I suspect that this argument in favour of the market system can be collapsed into one of the other arguments, possibly the tact-knowledge aggregation argument or the decentralised optimisation argument.

In fact, this isn’t so much an argument in favour of markets as a description of what markets are for, without necessarily demonstrating that markets are superior to alternative means of co-operation. Lindblom is very clear that markets have both positive and negative characteristics.

Markets as decentralised optimisation systems

It is possible to show that, under certain highly restrictive conditions, market systems can achieve something called ‘static efficiency’, whereby scarce resources are, in some sense, allocated in an optimal fashion. The most complete expression of this view is to be found in Gerard Debreu’s Theory of Value.

I have yet to read Theory of Value, but I am reliably informed that it contains some elegant and beautiful mathematics; however it is not clear that the theories that Debreu presents has and relevance to the actually-existing economic world. Indeed, it seems that Debreu himself was at pains to point out that his theory had no real-world implications. In fact, it could be said that Theory of Value constitutes a negative result, essentially demonstrating that the conditions required for markets to achieve optimal results are so restrictive that they will never be met in practice.

Markets as revelation of democratic preference

I am vaguely aware that certain people argue that markets are tools for revealing the collective ‘will’ of diverse groups of people. Without wishing to burden this notion with more credence than it can support, I shall include this in the list, if only to ease future referral.


Marxism vs. social democracy

Whilst re-reading Straw Dogs by John Gray, I came across this remark on the post-war consensus:

The welfare state was a by-product of the Second World War. The National Health Service began in the Blitz, full employment in conscription.

Look back to the nineteenth century, to the time between the end of the Napoleonic Wars and the outbreak of the First World War. That great era of peace in Europe was also a period of great inequality. The majority of the population lived from hand to mouth, and only the very rich were safe from sudden poverty.

In affluent, high-tech economies, the masses are superfluous – even as cannon fodder. Wars are no longer fought by conscript armies but by computers – and in the collapsed states that litter much of the world, by the ragged irregular armies of the poor. With this mutation of war, the pressure to maintain social cohesion is relaxed. The wealthy can pass their lives without contact with the rest of society. So long as they do not pose a threat to the rich, the poor can be left to their own devices.

Social democracy has been replaced by an oligarchy of the rich as part of the price of peace.

It is worth reminding ourselves that William Beveridge originally conceived of the British welfare state as a system to “keep men fit for service”.

I have suspected for a long time now that the post-war consensus was an historical one-off. A confluence of global and national factors enabled the creation of a relatively peaceful and relatively prosperous world, at least in the western democracies. Adam Posen argues that we are returning to the Victorian ‘old normal’ of a highly unequal, globalised, and multi-polar world. The world founded on what Cosma Shalizi calls the “useful work of mid-century optimism and intelligence” in monetary policy has collapsed, and been replaced with a world of floating exchange rates and neoliberal trade policy; a policy which benefits the global 1%, and results in stagnant or falling living standards for the majority – at least in the western democracies.

But of course, humanity as a whole has been made better off. The new working classes of China and India are massively wealthier than they were during the so-called ‘golden age’ of capitalism. Essentially, the last thirty years has seen a transfer of wealth from the middle and working classes of the developed world up to the global elite, and down to the Chinese and Indians. What I don’t understand is whether this transition could have been handled better; could it have been possible for politicians to ‘ease the fall’ as jobs went overseas? Is it true that many people in ‘post industrial’ countries are simply surplus to requirements, as Gray implies?

Chris Dillow is fond of pointing out that social democracy faces many inherent limitations in what it can accomplish, because it attempts to reach an accord with a capitalist system that is inherently hostile to the interests of most working people. I don’t know if Chris is right; after all, what was once achieved may again be achievable, but I agree that there are many systemic reasons to be sceptical of social democracy.

Subjective experience, language, Husserl, and MacLeod

The following quotation is from Literary Theory: An Introduction, by Terry Eagleton:

For phenomenological criticism, the language of a literary work is little more than an ‘expression’ of its inner meanings. This somewhat secondhand view of language runs back to Husserl himself. For there is really little place for language as such in Husserlian phenomenology. Husserl speaks of a purely private or internal sphere of experience; but such a sphere is in fact a fiction, since all experience involves language and language is ineradicably social. To claim that I am having a wholly private experience is meaningless: I would not be able to have an experience in the first place unless it took place in the terms of some language within which I could identify it.

[emphasis mine]

I actually disagree with the emphasised part of this. Animals probably have experience. Small children have experiences. People who were raised by wolves and have no language nevertheless have experiences. I find the idea that subjective experience requires language to be a little odd. There is so much about the world as I experience it that is so utterly beyond language that I really don’t know where to start with disagreeing with it.

Ken MacLeod holds a similar belief:

Subjectivity is inseparable from language. Although emerging from animal sensation, animal emotion and animal signalling, conscious reflection and self-awareness are unique to human beings. We can name the prey, but they don’t name themselves.

Again, I disagree. Or at least, I would argue we cannot (yet) be so certain. Dogs and cats experience things; they certainly experience pain. The point is we don’t yet really understand the nature of subjective experience; but for the time being I remain un-persuaded that animals do not experience pain in a similar fashion to people. Animals are not automatons (or perhaps they are, and perhaps we are, but we are still automatons that possess qualia and intentionality, whatever these things may be). In Straw Dogs, John Gray tells us that:

Plato and Descartes tell us that consciousness is what marks off humans from other animals. Plato believed that ultimate reality is spiritual, and that humans are alone among animals in being at least dimly conscious of it. Descartes saw humans as thinking beings. He declared he knew he existed only because he found himself thinking – ‘Cogito, ergo sum’ (I think, therefore I am) – and that animals were mere machines. Yet cats, dogs and horses display awareness of their surroundings; they experience themselves as acting or failing to act; they have thoughts and sensations.

Despite an ancient tradition that tells us otherwise, there is nothing uniquely human in conscious awareness.

This is one of those areas where I find myself more in agreement with John Gray and Montaigne than with MacLeod and Eagleton.  But the dispute ultimately returns to the gap between the subjective and the objective, between what we feel and what is true, between the object and the subject. This gap between the subjective world of individual experience and the “real world” that (we suppose) exists “out there” is the mystery. I look forward to further progress in this regard.

Horrible mansplainy comment mark 2

Let me explain my thinking. In society, there is a problem called sexism. In those societies fortunate enough to have achieved a high degree of formal legal equality between the genders (the UK, the USA, Canada, and many other countries besides), there remains the problem of sexism; a problem which takes many forms, such as women being underpaid, under-represented in certain jobs, suffering from sexual abuse and rape etc.

The purpose of feminism is to remove this sexism. The victory condition for feminism is a society without sexism. Fine. But what is sexism? Broadly speaking, it is a set of beliefs and attitudes that are widely held about how women should behave; and these beliefs and attitudes are held by *everyone*, both men and women. These beliefs and attitudes are the *cause* of the various inequalities that exist between the genders (again, this obviously only applies to those countries that *don’t* still have inequalities enforced by law).

In order to combat this sexism, we must endeavour to change people’s beliefs and attitudes. Now, because many people will deny that they *do* hold sexist views, this process of changing beliefs will require that we first persuade people that a problem exists in the first place. A great deal of sexism is ‘subconscious’ sexism that manifests itself in things that don’t happen as much as things that do happen (e.g. women’s lower pay may be attributable to men simply not thinking to offer women promotions. While it is difficult to *prove* that a particular woman has lost out, the macro-level evidence is clear.). Once we have successfully persuaded people that a problem exists we can persuade them to change their beliefs and hence change their behaviour.

But here’s the problem: the vast preponderance of sexist beliefs are held by men, and the vast preponderance of sexist behaviour is performed by men. This means that at some point the feminist movement will have to persuade men that a) many men hold sexist beliefs, and b) that these sexist beliefs cause those men to behave in a sexist fashion.

So yes. The feminist movement needs men. It needs to include men. In fact, the victory condition of feminism would be one in which *all* men were converted to feminism, and in which all men were good feminists (i.e. non-sexist).

I think the problem here is that the OP conception of ‘the feminist movement’ seems to be some sort of army or corporation, with hierarchies and bosses at the top – bosses who OP says can only be women – and which does… something, somehow, to combat sexism. Like as if sexism was a foreign army of people that you could defeat on a battlefield. But sexism isn’t like that.

I sincerely believe that we are more likely to succeed if we are polite, and if we make our arguments rigorously and calmly, because we are right. I don’t think feminism will succeed if we insist that feminism is transformed into some kind of ‘no boys’ social club for women.

In which our hero mansplains to feminists

I left a comment at this post on the blog of someone called Jem Bloomfield:

So this piece highlights a lot of problems I have with the feminist movement, or at least with the online/Twitter wing of the feminist movement. Take this, for example:

They can’t imagine not being the heroes of the movement.

Or this:

For white cis men, one of the most important things we can realize about feminism is that it is not about us. We can contribute, we can co-operate, but we can’t lead it, win it or set the agenda. We can’t embody it or introduce it to the big time. We can’t be feminism. If we ever did, it would stop being feminism.

This strikes me as a deeply counter-productive position. It seems to imply that feminism is some exclusive club, rather than a political ideology. As such, there is no ‘agenda’. There is no need for ‘leaders.’ A set of moral or ideological propositions constitutes an agenda in and of itself. A political ideology succeeds through persuading as many people as possible to adopt its tenets, and not through the creation of charismatic leaders.
Political movements succeed by building coalitions of interests and coalitions of agreement. If feminism is to succeed it must include men, and it must make itself appealing to men.
I know that this last sentence will probably outrage a lot of people, but the facts are that men are approximately 50% of the human race and represent rather more than 50% of the existing power and wealth of the human race. Is this a good thing? No. In the best of all possible worlds, would it be the case that there existed such an inequality of power? No. Do we live in the best of all possible worlds?

To succeed in making a better world, feminists must co-opt men and ensure that men are ‘on board’ with the feminist movement and with its ideals and objectives. As has already been mentioned, it’s mostly the actions and behaviour of men that results in a need for feminism in the first place. If men feel like feminism is ‘something for women’ they won’t care about, or they will dismiss it, or (perhaps worst of all) they will simply continue to be indifferent to it.
Men like to be heroes. They like to see themselves as heroes. Women probably like to be heroes too. So what’s the harm with encouraging people (including men) that they are the heroes of a morally righteous political movement? It’s the sort of thing that gets the juices flowing. It’s the sort of positive vision that people could actually feel enthusiastic about supporting.

If we[1] don’t have a problem taking into account another person’s special expertise in a setting like that, surely we should be even more keen to acknowledge their right to speak about their own experience.

There is a difference between data (e.g. a woman’s particular experience of sexism in a patriarchal world), and doctrine (e.g. feminists must oppose Page 3). The latter, unlike the former, is the subject of debate and argument, and the quality of an argument is independent of the person making it.
Look: I know that this comment probably sounds incredibly trollish, and I apologise for that; but I’d sincerely like to hear someone explain why I’m wrong, if I am.

I'm a white male, age 18 to 49. Everyone listens to me, no matter how dumb my suggestions are.

“I’m a white male, age 18 to 49. Everyone listens to me, no matter how dumb my suggestions are.”

Markets vs. central planning: some distinctions

I left the following comment on Unlearning Economics’ post at Peria:

As I see it, there are three intermingled debates going on here. They are: 1) An argument about the relative information-theoretic and allocative abilities of centralised hierarchical systems on the one hand and decentralised market systems on the other; 2) an argument about the intrinsic ethical and moral status of various types of political economy; and 3) an empirical argument about which nation states have killed the most people, and been responsible for the most suffering.

On the subject of argument 1): Free markets are not the same thing as capitalism. Central planning is not the same thing as communism. There has been a tendency for capitalist countries to exhibit far greater decentralisation of decision making and a greater reliance on some form of market system; but this historical fact doesn’t mean that ‘private ownership of the means of production’ necessarily requires a market system, nor does it mean that the historical tendency for communist countries to adopt central planning means that *all* future communist or socialist economies must be built around central planning.

I would also note that the most economically successful countries have historically used *both* central planning (in the form of large, centralised private firms; large, centralised government departments; and government-directed industrial policy) and decentralised market systems. Markets and hierarchies are tools, and different jobs require different tools.

I recommend ‘The Market System’ by Charles Lindblom on this subject. ‘The Origin of Wealth’ by Eric Beinhocker is also very good.


Capitalism vs. communism and markets vs. central planning

Reading the comments under this excellent article by Unlearning Economics, I am struck by the fact that most of the arguments in the capitalism vs. communism debate are let down by the two sides failing to lay out rigorous definitions from the outset. In order for a proper debate to take place, both sides must specify what they consider to be the necessary and sufficient conditions for an economy to be considered ‘communist’ or ‘capitalist.’

I have pointed out before that markets are not the same thing as capitalism; it would be useful now to note that central planning is not the same thing as communism. Historically, most so-called communist states have attempted to engage in central planning, rather than in market-based solutions to problems of resource allocation; but this does not mean that all conceivable communist states must necessarily engage in central planning.

I’ve just realised I used the phrase ‘so-called communist states’ in my previous paragraph; in doing so, I could be accused of ‘special pleading’, and claiming that ‘true communism’ has never existed. This wasn’t my intention, which was to highlight the fact that just because people give something a particular name doesn’t mean that the name is accurate or descriptive.

So what is communism?

I’m not entirely sure. I can think of several highly limited and unsatisfactory definitions off the top of my head. Marx himself was somewhat vague on the subject of exactly what communism would look like. This continuing vagueness is part of the problem; communism can mean lots of things to lots of different people, just like capitalism. All this just shows how important it is to lay out rigorous definitions at the outset.

Form and function in writing

Wittgenstein once wrote that “my difficulty is only an – enormous – difficulty of expression.” I took that quote from his Wikiquote page, and I can’t really look at it without wanting to re-write it as “my only difficulty is an – enormous – difficulty of expression”; that I find it so difficult to avoid such an edit* is one of the many problems I encounter when attempting to write, of which more below. My own problem, however, could be more accurately expressed as “an enormous difficulty of knowledge, understanding, focus, and expression”; after all, I am no Wittgenstein.

What I find most challenging about writing is that it isn’t any one singular cognitive process. It consists of several intertwining processes. You’ve got to know the idea you want to express; you have to understand the idea you want to express; you have to appreciate which elements of the idea are useful and relevant, and which are not; and finally you’ve got to be able to express the idea clearly and elegantly.

Each of these is a distinct type of cognitive activity. Knowing which specific point one wishes to get across is often surprisingly difficult. When writing I often encounter a sort of factorial explosion of ideas – like the polar opposite of writer’s block – in which one thought leads to another thought which leads to another two or three thoughts.

I have only so much RAM in my head. Shortly after beginning writing I often find myself overwhelmed with possibility. I would like to hold a single idea in my head at a time; I picture it floating with crystalline distinction within my Cartesian theatre, without any connections or linkages with anything else; but it seems almost impossible to do this. The crystal grows and mutates and draws in other ideas and concepts and I am left with a head encrusted with nonsense.

Understanding presents another – separate – problem. Oftentimes the reason I am compelled to write in the first place is that I do not yet fully understand an idea, concept, or theory; and so I write long, rambling essays in which I come to no solid conclusions and which express nothing but my own ignorance.

Focus. There isn’t really much to say about this that isn’t already demonstrated by the present document. I find it difficult to focus. This is as true in writing as it is in my wider life; in fact, I find it almost impossible to focus on any one task for more than ten minutes or so. I don’t know if this is an intrinsic element of my personality or simply a consequence of living in a distracted age, but there it is.

The final aspect of writing that I find problematic is that of performance. As Richard Lanham argues in Analyzing Prose, all writing is necessarily performative; you can’t help but strike a pose, even if it is one of “objectivity” or “transparency.” There is a gap – a fascinating gap – between ideas and language and the particular symbolic systems we use to express ideas. Words are distinct from ideas, and arranging words in a pleasing order is a different task to developing pleasing ideas. In my first paragraph I couldn’t help but re-write the original Wittgenstein quotation into what I consider a more pleasing form, whilst retaining the same meaning as the original. But does it really have the same meaning? By placing “difficulty” before “only” in the original Wikiquoted form the emphasis is placed on the difficulty itself, whereas in my altered version placing the “only” before the first “difficulty” deflates the first half of the sentence and places the emphasis on the “difficulty of expression”. This makes it more quotable. Or perhaps not.

*Apparently the quotation was taken from his journal entry, which may well have been in German, in which case reforming the particular arrangement of the sentence might be entirely legitimate as a direct translation of the original text – I don’t know)