Monthly Archives: October 2014

Cybernetic dreams

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I read Eden Medina’s [amazon_link id=”0262525968″ target=”_blank” ]Cybernetic Revolutionaries: Technology and Politics[/amazon_link] in Allende’s Chile because I spotted the fuss on Twitter about Evgeny Morozov’s New Yorker piece, The Planning Machine: Project Cybersyn and the Origins of the Big Data Nation. I’m not all that interested in the fuss but was very intrigued by what people were saying about the book.

It is indeed a completely fascinating history and reflection on the interaction between technology and politics, and I highly recommend it. The cover photograph gives a good flavour of the weirdness of this episode. It is the control room built in Santiago in late 1972 under the guidance of British cybernetician Stafford Beer. The control room, that is, for the economy, linking a network of telex machines in factories around the country to a mainframe computer in the capital.

[amazon_image id=”0262016494″ link=”true” target=”_blank” size=”medium” ]Cybernetic Revolutionaries: Technology and Politics in Allende’s Chile[/amazon_image]

While not a fully planned economy, the Allende government had nationalised substantial sections of industry and, as time went on and the American-led sanctions began to bite, planned to control key prices. It also had to contend with a nationwide strike led by businesses opposed to the leftist government. The aim with Project Cybersyn, as the cybernetic plan was labelled, was to deliver to the central authorities ample real-time information on production while allowing individual factories the freedom to make their own decisions. Government policy could be adapted quickly in response to the trends identified. In other words, it was meant to avoid the pitfalls of central planning while enabling the co-ordination benefits. As Medina puts it: “Connecting the State Development Corporation to the factory floor would … allow the government to quickly address emergencies such as shortages of raw materials and adapt its policies quickly. Up-to-date production data would also allow Chile’s more experienced managers to … identify problems in factories and change production activities in the enterprise when necessary to meet national goals.”

Apart from the obvious practical difficulties (eg only one mainframe and very few programmers), one challenge was actually modelling the economy. It is unclear what kind of relationships were written in to the code, but they must have been something similar to those embodied in the simple linear model of the Phillips Machine. For all that it was a project about managing the economy, there was just one economist on the team, according to the book. However, Medina emphasises the intended flexibility of Project Cybersyn: “The model would not function as a predictive black box that gave definitive answers about future economic behaviour. Rather, it offered a medium in which economists, policy makers and model makers could experiment and, through this act of play, expand their intuition about [the economy].” The structure embodied the cybernetic emphasis on responding to the information contained in feedback. I must say I didn’t understand Beer’s cybernetic models at all, as the language and concepts are so different from anything I’m familiar with – but then cybernetics itself comes across as rather futuristic-retro.

Beer also hoped to have a method of getting real-time feedback from the people to the government by installing ‘algedonic meters’, or dials indicating their happiness or dissatisfaction, that would be installed in community centres or public places. This part of his plan was never taken up. However, he was keen on getting public engagement with the project and even persuaded Chile’s most famous folk singer Angel Parra to write a Project Cybersyn song.

One of the divisions within the project, well-described in the book, was between the technocrats who saw it as a tool for managing the economy more effectively, and those who saw it as a means of reverse engineering politics and society on the ground. The latter group hoped workers in the factories would develop their own sense of autonomy through inputting information into the telex, and understanding in this way the part they played in the whole. “[Beer] believed that engineering a technology also provided opportunities to engineer the social and organizational relationships that surrounded it.” The technocrats tended to dominate, though, largely because of the growing difficulty Allende’s government had in sustaining its coalition. Politics didn’t co-operate with the technology.

One of the interesting aspects of Project Cybersyn is that the technologies it used were not the most advanced. The US blockade largely prevented Chile from importing more computers or sophisticated equipment. Aside from the one mainframe and the telexes, the futuristic control room used slide projectors and hand drawn slides. The fibreglass control chairs, based on Italian designs, were one of the most cutting-edge aspects of the control room. And yet the project was the most ambitious cybernetics project ever (partially) implemented.

The project Cybersyn control room

It’s hard to decide whether the people behind Project Cybersyn were crazy dreamers or just 50 years ahead of their time – what would they have made of the possibilities of the web and ‘big data’? The basic cybernetic question the project poses remains valid: can policymakers do a better job with rapid real-time feedback on economic indicators – or is the economy as a dynamic, complex system simply beyond the kind of mapping implicit in any such project? Can what is measured about the economy reshape the economy or underlying social order in turn – and what does that imply for the indicators one might try to include in a Project Cybersyn 3.0?

Fascinating questions, and a fascinating book.

PS After finishing the book, I read the Morozov column. It is a precis of the story told in Medina’s book, with a handful of extra paragraphs woven in that give his own reflections on the issues raised – including, for example, exactly the obvious ‘what could we do in the era of the internet of things’ question. If the column had actually been billed as a review of [amazon_link id=”0262525968″ target=”_blank” ]Cybernetic Revolutionaries[/amazon_link], I don’t think there would have been any fuss. While not plagiarism, as the book is the only source mentioned, for Morozov to have given it just one passing mention in the ‘Critic at Large’ section seems ungenerous.

Markets in stories

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Yesterday I attended a very interesting conference, on Non-Equilibrium Social Science, which stands for making economics more realistic and interesting – looking at the economy in terms of non-linear dynamic systems. As ever at a good conference there were some great opportunities for conversation – and book recommendations. I came away with Marion Fourcade’s [amazon_link id=”0691148031″ target=”_blank” ]Economists and Societies[/amazon_link], and W.E.G.Salter’s [amazon_link id=”0521095689″ target=”_blank” ]Productivity and Technical Change[/amazon_link], and William Hazlitt’s 1805 [amazon_link id=”1151650102″ target=”_blank” ]Essay on the Principles of Human Action[/amazon_link].

[amazon_image id=”0691148031″ link=”true” target=”_blank” size=”medium” ]Economists and Societies: Discipline and Profession in the United States, Britain, and France, 1890s to 1990s (Princeton Studies in Cultural Sociology)[/amazon_image]   [amazon_image id=”1144113512″ link=”true” target=”_blank” size=”medium” ]An Essay On the Principles of Human Action: Being an Argument in Favour of the Natural Disinterestedness of the Human Mind..[/amazon_image]

Also, after hearing him speak, David Tuckett’s [amazon_link id=”0230299857″ target=”_blank” ]Minding the Market[/amazon_link]. His argument was, in a nutshell: “Financial markets are markets in stories.” He classed as standard models both the rational choice and ‘behavioural’ approaches to decision making, because both assume there is an objective reality about which an optimum can in principle be known or calculated. Instead, Prof Tuckett argued, the decision problem is one of making any sense at all of how to act now on the basis of information now about an ontologically uncertain future. His answer is that we act on the basis of ‘conviction narratives’ which are collective interpretations of what today’s ‘facts’ (all based on our sense perceptions) mean for tomorrow. He described some empirical work looking at the stories that run in financial markets, as extracted from unstructured texts such as newswire reports, brokers’ notes and Bank of England reports.

[amazon_image id=”0230299857″ link=”true” target=”_blank” size=”medium” ]Minding the Markets: An Emotional Finance View of Financial Instability[/amazon_image]

This is intriguing. It certainly chimes with my unease (as in my Tanner and Pro Bono lectures) about the way economists talk – especially in the context of policy – as if they are omniscient outsiders, not part of what they are analysing. My question – which Prof Tuckett agreed is still-unexplored territory – is how reality interacts with our narratives, sometimes changing them. I’d like to have followed up by asking if the idea is a [amazon_link id=”0226458121″ target=”_blank” ]Kuhnian[/amazon_link] paradigm shift, but in the domain of financial markets, or economic life in general, rather than scientific exploration.

Another conference highlight was Bridget Rosewell on the inadequacy of our standard cost-benefit approach for deciding whether or not to go ahead with transport infrastructure projects, inadequate because they use a comparative static, equilibrium framework for something that is bound to change the dynamics of the economy. She gave many examples of projects that would never have passed a modern cost-benefit assessment, from Bazalgette’s London sewers to the Jubilee Line Extension and – as she is scrupulous – an example of one that wasn’t making it in terms of her tale of self-fulfilling visions that deliver the benefits they subscribe. (This is the fantasy airport on Boris Island, which she supports.) Bridget touches on this infrastructure question in [amazon_link id=”1907994149″ target=”_blank” ]Reinventing London[/amazon_link].

[amazon_image id=”1907994149″ link=”true” target=”_blank” size=”medium” ]Reinventing London (Perspectives)[/amazon_image]

The bosky by-ways of the internet, and John Dewey

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It’s half term week, and I’ve spent a peaceful half hour this morning, before embarking on the long process of waking up my teenager, meandering down the bosky by-ways of the internet. It took me, via Philip Ball’s blog post on a new book on the uncertainty principle ([amazon_link id=”0393067920″ target=”_blank” ]The Quantum Moment[/amazon_link] by Robert Crease and Alfred Scharff Goldhaber), to the Stanford Encyclopedia of philosophy’s entry on John Dewey: “He is probably the only philosopher in this Encyclopaedia to have published both on the Treaty of Versailles and on the value of displaying art in post offices.” This is highly promising.

[amazon_image id=”0393067920″ link=”true” target=”_blank” size=”medium” ]The Quantum Moment – How Planck, Bohr, Einstein, and Heisenberg Taught Us to Love Uncertainty[/amazon_image]

Dewey is someone who has always sounded appealing in fact, but is somehow a terrible gap in my knowledge. Which of his books should I start with? [amazon_link id=”0809311623″ target=”_blank” ]The Quest for Certainty[/amazon_link] (1929) appeals, but so does [amazon_link id=”0804002541″ target=”_blank” ]The Public and Its Problems[/amazon_link] (1927), especially having just read about Walter Lippmann. The internet obviously favours [amazon_link id=”1614272204″ target=”_blank” ]How We Think[/amazon_link]. Advice welcome.

[amazon_image id=”0271055707″ link=”true” target=”_blank” size=”medium” ]The Public and Its Problems: An Essay in Political Inquiry[/amazon_image]

Festival of Economics

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The third annual Festival of Economics is happening in Bristol next month, from 20-22 November, and tickets are selling well. There’s a fine crop of books associated with the speakers too:

[amazon_link id=”057130981X” target=”_blank” ]How To Speak Money[/amazon_link] by John Lanchester

[amazon_image id=”057130981X” link=”true” target=”_blank” size=”medium” ]How to Speak Money[/amazon_image]

[amazon_link id=”0691141428″ target=”_blank” ]The Social Life of Money[/amazon_link] by Nigel Dodd

[amazon_image id=”0691141428″ link=”true” target=”_blank” size=”medium” ]The Social Life of Money[/amazon_image]

 

[amazon_link id=”1907994114″ target=”_blank” ]Housing: What’s the Plan[/amazon_link] by Kate Barker

[amazon_image id=”1907994114″ link=”true” target=”_blank” size=”medium” ]Housing: Where’s the Plan? (Perspectives)[/amazon_image]

[amazon_link id=”1781250111″ target=”_blank” ]Free Lunch[/amazon_link] by David Smith

[amazon_image id=”1781250111″ link=”true” target=”_blank” size=”medium” ]Free Lunch: Easily Digestible Economics[/amazon_image]

[amazon_link id=”026252516X” target=”_blank” ]Economics After the Crisis[/amazon_link] by Adair Turner

[amazon_image id=”026252516X” link=”true” target=”_blank” size=”medium” ]Economics After the Crisis: Objectives and Means (Lionel Robbins Lectures)[/amazon_image]

[amazon_link id=”1444757121″ target=”_blank” ]How Do We Fix This Mess?[/amazon_link] by Robert Peston

[amazon_image id=”1444757121″ link=”true” target=”_blank” size=”medium” ]How Do We Fix This Mess?: The Economic Price of Having it All, and the Route to Lasting Prosperity[/amazon_image]

[amazon_link id=”1849546223″ target=”_blank” ]Prisonomics[/amazon_link] and [amazon_link id=”1849546282″ target=”_blank” ]Greekonomics[/amazon_link] by Vicky Pryce

[amazon_image id=”1849546223″ link=”true” target=”_blank” size=”medium” ]Prisonomics: Behind bars in Britain’s failing prisons[/amazon_image]

[amazon_link id=”1907994165″ target=”_blank” ]Why Fight Poverty?[/amazon_link] by Julia Unwin

[amazon_image id=”1907994165″ link=”true” target=”_blank” size=”medium” ]Why Fight Poverty? (Perspectives)[/amazon_image]

[amazon_link id=”1907994149″ target=”_blank” ]Reinventing London[/amazon_link] by Bridget Rosewell

[amazon_image id=”1907994149″ link=”true” target=”_blank” size=”medium” ]Reinventing London (Perspectives)[/amazon_image]

and of course

[amazon_link id=”0691156794″ target=”_blank” ]GDP: A Brief But Affectionate History[/amazon_link] by Diane Coyle

[amazon_image id=”0691156794″ link=”true” target=”_blank” size=”medium” ]GDP: A Brief but Affectionate History[/amazon_image]

Walter Lipmann, public economist

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A new biography, [amazon_link id=”0674368134″ target=”_blank” ]Walter Lippmann: Public Economist[/amazon_link] by Craufurd Goodwin, is a very interesting portrait of someone not all that well known now. I ended it appreciating that Lippmann was a more important figure in early 20th century America than I’d realised, perhaps a Martin Wolf of his day. The mixture of intellectual rigour and status with an ability and urge to communicate with the wider public is relatively rare, and important in modern democracies, with all their political and economic complexities. Lippmann was probably the first ‘public economist’.

I was aware of Lippmann only through his 1920 book [amazon_link id=”0691134804″ target=”_blank” ]Liberty and the News[/amazon_link], which for some random reason sits on my shelves, and [amazon_link id=”1484150295″ target=”_blank” ]Public Opinion[/amazon_link], published in 1922. The biography concentrates instead on his books and columns on economics and political economy, tracing the development of his thought as he watched the Depression and war unfold, and engaged with both Keynes’s and Hayek’s work. Throughout the decades, however, in an era when the old order was dying, Lippmann challenged the attractive certainties of the extremes, observing that ‘free’ markets had never existed, and that collectivism relied on censorship, spying and terror. This search for a way to manage the modern economy, and deliver to voters in democracies the economic well-being or assurance they demanded, while safeguarding liberty, remained his theme throughout, above all in [amazon_link id=”1178812782″ target=”_blank” ]The Good Society[/amazon_link].

Lippmann sounded (in [amazon_link id=”1560005599″ target=”_blank” ]The Method of Freedom[/amazon_link]) rather like a modern behavioural economist: “The classical economists over-estimated the enlightenment which is based on self-interest and the fortitude based on self-reliance. … Imitation, the herd instinct, the contagion of numbers, fashions, moods, rather than enlightened self-interest, have tended to govern the economy.” And elsewhere, he emphasised the importance of institutions, regretting the fact that economists had not combined their powerful analysis with a ‘humanly satisfactory’ social philosophy. Economics needed to show concern not only with liberty, but with a ‘concern always for those who could not cope with modernity,’ as Goodwin puts it.

Lippmann, always interested in education and closely involved in the economics department at Harvard, was unable, though, to resist the tide of increasing specialization, to stop the schism between the humanities and social sciences, or the isolation of economics from politics, philosophy, psychology and history. What a shame.

This is a timely biography. Lippmann’s concern to navigate through the real complexities and uncertainties of a transitional, even revolutionary, economic era while avoiding the appealing, easy answers was admirable. So was his determination to explain to fellow citizens the economic debates of the day. Not surprisingly, I find the idea of a public economist very attractive. As a character, Lippmann seems slightly unappealing – brilliantly successful from his undergraduate days on and wholly plugged in to the establishment, he comes across as rather smug, although this is no doubt partly because of my anachronistic reading of his letters as quoted here. There is also perhaps a bit too much detail in the book for the mildly interested reader, although having said that it is well-written and not at all too long. Lippmann is well worth re-discovering as we continue through our own period of economic and political upheaval, and this book sheds light on what made him an important figure who deserves to be better known.

[amazon_image id=”0674368134″ link=”true” target=”_blank” size=”medium” ]Walter Lippmann: Public Economist[/amazon_image]

[amazon_image id=”1178812782″ link=”true” target=”_blank” size=”medium” ]The Good Society[/amazon_image]  [amazon_image id=”1484150295″ link=”true” target=”_blank” size=”medium” ]Public Opinion[/amazon_image]