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Maniacs

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I’ve *thoroughly* enjoyed The Maniac by Benjamin Labatut (as I did his first, When We Cease to Understand the World). It’s a sort of fictionalised biography of John von Neumann, although very different from a non-fictional biography – like the excellent The Man From The Future by Ananya Bhattacharya – in taking some liberties. The structure is a series of short memory snapshots by people who had known him – his daughter, his 2nd wife, colleagues like Wigner and Morgenstern – with (generally unflattering) perspectives on both the man and the work.

In recent years I’ve been increasingly obsessed with the influence of early 20th century middle European/Vienna circle thought in sumperimposing the positivist/normative dualism on Cartesian dualism. This has given economics – among other modern intellectual disciplines – both its analytical strength and its massive limitations. At its heart are Godel’s incompleteness theorems: the point of The Maniac is to link this question to the modern world of computation and AI. Can AI ever become ‘alive’ or think for itself? Well do you believe Gödel applies to a Turing machine with the Von Neumann architecture – or not? Labatut’s novel ends with Von Neumann dying of the cancer that eventually destroyed his extraordinary intelligence, and leaving the reader wondering whether the great man’s late obsession with computation and the evolution of life was an early sign of madness, or brilliance.

I enjoyed also Stephen Budiansky’s biography of Godel, Journey to the Edge of Reason. And recently listed some other books I’ve read of late on positivism and its discontents. By coincidence I’m also partway through Sergii Plokhy’s Atoms and Ashes, which starts with the US race to detonate hydrogen bombs after the war, and the fallout from the Ivy Mike test – and also can thoroughly recommend Philippe Sands book, The Last Colony, about the Marshall Islanders’ long journey through the international courts for compensation. (I don’t watch movies in general but should maybe make an exception for Oppenheimer.)

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Books at a workshop

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A while ago I took part in an interesting interdisciplinary workshop at The New Institute in Hamburg on the broad theme of a ‘new Enlightenment’. There was more than the usual amount of recommending books, thanks to the fact that people don’t know each other’s academic literatures. Here’s what I managed to jot down – I’ve read quite a few but not all:

Globalists Quinn Slobodian

Can We Afford the Future Frank Ackerman

How to Blow Up A Pipeline Andreas Malm

The Logic of Collective Action Mancur Olson

Why Some Things Should Not Be For Sale Debra Satz

Economic Calculation and Forms or Property Charles Bettelheim

Capitalism Against Capitalism Michel Albert

Saving Capitalism from the Capitalists Rajan and Zingales

The Great Leveler Walter Scheidel

Education, Justice & Democracy Danielle Allen and Rob Reich

There were many papers cited too – it’s always good to bring a reading list home from a conference.

 

The Paper Age

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October already!

I just finished reading Dinner With Joseph Johnson: Books & Friendship in a Revolutionary Age by Daisy Hay, thanks to a couple of train journeys and a quiet evening alone at home. I enjoyed it a lot. It’s one of the mini-genre of books (like The Lunar Men) that paints a picture of an era’s ideas through a description of the people who gathered to talk and wirte and indeed paint about them. In this case it’s Britain of the 1770s to 1790s, and the centre – although an enigmatic character himself compared to some of his famous authors and illustrators – was Unitarian publisher Joseph Johnson. The central event giving the book its narrative arc is the French Revolution, and the subsequent crackdown on freedom of speech and worship by the British Government.

Anyway, the relevance here is this passage about a magazine started by Johnson, the Analytical Review (great title). One reviewer is quoted: “This is a PAPER AGE.” the book continues, “Paper had become the engine of Britain’s emergent capitalist economy, as banknotes, share certificates, contracts and promissory notes circulated out from London into the provinces and across the globe.” The magazine estimated that nine tenths of Britain’s trade relied on the medium of paper.

I suppose ours is an ELECTRON age. Although electrons, as Ed Conway makes so plain in the excellent Material World, depend entirely on a material substrate.

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What stops good innovation happening?

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On the train this week I read a slim NBER volume, Entrepreneurship, Innovation Policy and the Economy edited by Benjamin Jones and Josh Lerner. There are some interesting papers covering pharmaceuticals innovation, green innovation and distributional issues – specifically, race and place.

The first paper makes a strong case for government support for new vaccine development as the combination of a low probability of any single vaccine being needed and the cost of clinical trials make it impossible for a commercial case to stack up. (It does not tackle the question of why and whether trials need to be so long and costly.) Therefore something like advance purchase commitments are needed. The second paper sets out a trilemma between low price, sufficient quantity and adequate quality including safety for off-patent drugs. Written by US lawyers, it implies the real problem is the unwillingness of the authorities to let generic producers charge enough for their products; absent too low a price cap, quantity and quality can both be assured.

On green tech, one paper looks at the role of venture capitalists in financing science-based rather than incremental innovations as (as Will Baumol also described in The Free Market Innovation Machine) big companies do small innovations and small companies do big innovations, for the most part. The second paper argues for continuing to invest in ‘dirty’ companies to exercise ‘voice’ – Hirschman’s insight pops up everywhere these days.

The final papers find, respectively, that there is a clear racial gradient in access to capital for innovation; and that the benefits of spatial agglomeration outweigh the costs of congestion and by a large margin on average, but by a zero margin in the most R&D concentrated cities such as San Francisco/Silicon Valley.

All very nice papers, of interest to people studying innovation. Almost entirely US-focused however.

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Classes, elites and people

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I was very excited to get a proof copy of Branko Milanovic’s new book, Visions of Inequality From the French Revolution to the End of the Cold War, a while ago. The book is out in early October so it seems ok to post about it now. For anybody interested in inequality – and we all should be – anything by Milanovic is an essential read. His collation and interpretation of global inequality data is masterly, and his perspective from a socialist background (he was born in former Yugoslavia) is always interesting.

This new book is an intellectual history of how economists of the past have perceived and analysed inequality. The chapters cover Quesnay, Smith, Ricardo, Marx, Pareto, Kuznets and then – for the second half of the 20th century – a cluster of neoclassical economists during the period the book labels as ‘the long eclipse of inequality studies’. The Cold War involved in the west the myth (in economics although not in life) of a classless society. The book aims to describe each thinker’s ideas about the dynamics of income distribution, but not their normative perspective. Hence the discussion of Marx covers the evolution of wages and the downard tendency of the rate of profit but not the labour theory of value and alienation.

As I’m no expert on the history of thought, I learned a lot from the earlier chapters. The earlier thinkers all framed their analysis around the concept of social classes: “Classes were the natural concepts around which income distribution was ‘built’.” With Pareto, the analysis shifted to interpersonal distribution within a framework of the social hierarchy (the eltie vs the rest), and then with Kuznets and the later neoclassicals to individuals. This was partly driven by the availability of data on individual incomes from income tax records, after the introduction of direct taxation. The distribution among individuals could be sliced in different ways – location, education, occupation – but the background context of social structure faded. And then, after around 1960, economists’ interest in income distribution faded too. Why?

One comment Milanovic makes in the introduction struck home: “The puzzle was solved when I realized that the discipline of economics, as it was taught and studied betweem 1960 and 1990 in the West, was really designed for the period of the Cold War. …. Inequality seemed like a problem that was going away, and this reduced interest in studying it.  … Each side [in the Cold War] had to insist that it was more equal and less class based than the other.” The book quotes Kuznets’ 1955 AEA Presidential Address calling for economists to begin to look at processes of long-term change – technology, demography, social frameworks: “Effective work in this field necessarily calls for a shift from market economics to political and social economy,” Kuznets said. Of course, this did not happen and economics doubled down on the market framework. “We might say that economics as a field stagnated or even regressed, at least in its understanding of income distribution under modern capitalism,” Milanovic comments.

This has changed in recent years, with the empirical work of economists like Milanovic, Saez and Piketty – I would add the prescient prior work of Tony Atkinson (Inequality: What Can Be Done is a terrific overview and battle cry), who was ahead of his time. Visions of Inequality ends with a call to augment the study of individual incomes with a greater focus on non-labour income, on household income rather than the individual wage earner, and on global inequality. My addendum would be the distribution of unpaid work within the household and the community. It’s an exciting time to be studying inequality thanks to the data and recent scholarship, and an important time given how unsustainable the current distribution has become – after all, the term ‘elite’ has become an insult in political debate. This book is a great scene setter for the modern debate, not least in illustrating the link between ideas of inequality and the times in which ideas are formed.

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