Tag Archives: history

The social life of ideas

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I re-read a book I first read in 2002 when the first UK paperback was published, Louis Menand’s magnificent The Metaphysical Club: A story of ideas in America. It takes a sweeping view of the reshaping of the climate of ideas in the US after the Civil War, when pre-war traditions were replaced thanks to a combination of influences: the professionalisation of intellectual life in universities, the impact of scientific discovery particularly Darwin, and indeed the consequences of the Union victory. By the late 19th century the broadly defined pragmatist perspective that lasted until the 1960s – including an accommodation among White Americans over the status of African-Americans – was in place. The story is told though the intertwined histories of William James, Charles Peirce, Oliver Wendell Holmes and John Dewey.

The book lived up to my memory of its excellence, although newly poignant as the idea of an intellectual life among the new US ruling class seems increasingly like a contradiction in terms. I picked out moments that speak to my current preoccupations. For example, on the impact of The Origin of Species, that it emphasized difference or variation as an organising principle, not common characteristics. Some quotes that seem particularly relevant now: Everything human beings do by choice rather than by instinct, and course of conduct they choose when they might have chosen differently, is a moral action.”

William James arguing that society is the fact of life, and the idea of a non-social individual is pure abstraction, while Dewey agreed that there are no individuals without society: “Dewey taught that doing is why there is knowing.” Holmes meanwhile argued that experience – which defines the practice of justice – “is social, not psychological”, his construct of how the ‘reasonable man’ would judge being defined with respect to society.

Menand concludes: “Everything James and Dewey wrote as pragmatists boils down to a single claim: people are the agents of their own destinies. They dispel the fatalism that haunts almost every 19th century system of thought. … What Holmes did not share with those thinkers was their optimism. He did not believe that the experimental spirit will necessarily lead us, ultimately, down the right path. Democracy is an experiment, and it is in the nature of experiments sometimes to fail.” As he had seen it fail as a combatant in the Civil War.

Of course it won’t do to project today’s angst directly onto a 20+ year old book. But it is a brilliant and highly relevant read.

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Always and everywhere a political phenomenon

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I was quite excited about Carola Binder’s Shock Values: Prices and Inflation in American Democracy, as I expected something similar to Thomas Stapleford’s (2009) The Cost of Living in America. It isn’t about price indices, however, but about monetary policy and inflation. Macroeconomics is so much not my area that I feel unable to comment on the argument of the book, except to wholeheartedly agree that inflation is always and everywhere a political phenomenon. I’ve written (in my forthcoming book, The Measure of Progress) about the scarring experience of the late 1970s inflation for my working class family.

Anyway, Shock Values is a very readable monetary history of the United States, from the Revolutionary era to the 2020s. The theme throughout is the question of the political legitimacy of prevailing monetary arrangements, particularly the role of the state in aiming to stabilise prices. As the final chapter notes, the current episode of inflation has combined with broader US political instability and the arrival of crypto to raise new questions about that legitimacy – the book borrow’s Paul Tucker’s concept of legitimacy as set out in his book Unelected Power.

I knew less about the early (19th century) period and so particularly enjoyed that; perhaps I was the only audience member to leave Hamilton wishing there had been more about the formation of the first federal banking system. The sections on wartime price controls are also very interesting. If you’re already steeped in monetary history there might not be much new in the book, but I found it an excellent overview and it didn’t seem to be ideological – politely ignoring MMT and casting justifiably measured doubt on crypto assets.

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We’re all doomed – maybe

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I read Peter Turchin’s (2023) End Times: Elites, Counter-Elites and the Path of Political Disintegration on a long flight yesterday (I’m at Stanford for a couple of workshops). I’m not sure what to make of it. It’s well-written and an engaging read. The basic idea that there is a pendulum in the strength and health of polities, of generation-long good times and bad times, seems valid enough. The idea that one can model these computationally, I find a bit weird – speaking as one who spent some years early in her career modelling the UK and other economies computationally. Predicting outcomes from those models a year ahead that was tricky enough. This kind of system-wide modelling involves a great deal of judgement whereas this book claims an implausible degree of automaticity. As a sceptic about macroeconomic-modelling I’m a natural sceptic about – whatever we are going to call this – metaeconomic-modelling?

Turchin’s dynamics are driven by two phenomena: the immiserisation of the working class as the labour share of the economy declines, due to a ‘wealth pump’ as successful elites rig the economy to grab ever more of the value; and the over-production of elites who have to compete to benefit from the wealth pump. After a cycle of growth and integration, these mechanisms give way to a cycle of conflict and chaotic politics, driven by a coalition of the impoverished (Trump voters from the former manufacturing heartlands) and the not successful-enough elites (J.D.Vance).

This is a neat model, and seems to correspond to today’s US reality, but I have questions. For example, if expanding education is ‘over-production of elites’, what are we to make of the role of expanded education in technical progress and growth – is periodic conflict simply a cost of investment in human capital that has to be borne? Where does the role of demand in creating jobs for these productive people fit in? Do we need a war to kill off the excess PhDs and return to a stable, integrative phase? The role of excess labour supply in Turchin’s model seems to involve the lump of labour fallacy. All the (UK) evidence I know on immigration is that the effects on local wages and employment depend on (a) how complementary or not the skills of migrants are to local skills and (b) the state of the business cycle. Additional labour supply does not automatically mean immiserisation of workers.

There’s also a long quotation from Jack Goldstone to the effect that the population had grown substantially for 50 years before every major revolution and rebellion between 1500 and 1900. Does this mean the model will predict no more revolutions outside sub-Saharan Africa as populations are now in decline? It’s also a very US centric book despite using historical examples from many countries. For the instance UK labour share has not fallen like that in the US, although median wages have certainly stagnated.

I suppose in the end how seriously you take this kind of modelling depends on your belief about the extent to which human societies can learn and thus escape from past patterns. For what it’s worth, the book predicts the 2020s in the US will stay tumultuous. Of course, one doesn’t need a model to see this. I visit here once or twice a year but might stay away for a bit after early November 2024.

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Institutions, finance – and war

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Perhaps it was because I read the book in several stages, but I found it hard to take away a single line of argument from Geoffrey Hodgson’s The Wealth of a Nation: Institutional Foundations of English Capitalism. There is plenty of interest in the book but the chapters seem unconnected. One of the comments on the back, from my former colleague Sheilagh Ogilvie, makes a virtue of this, praising it for steering clear of monocausal explanations, which is true. But the book is also making an argument about the mode of economic analysis as well as about causes of the Industrial Revolution.

Anyway, here is what I took from my read:

  1. Other accounts of the origins of the Industrial Revolution and capitalism in England get something wrong: Marx, McCloskey, Mokyr, Allen, Weber, Uncle Tom Cobbley and all.
  2. This is because they do not employ the framework of evolutionary economics.
  3. Economics goes wrong big time in mixing up capital as in physical capital goods and capital as financial capital, starting with Adam Smith.
  4. Economic development is a process of the creation and changing of both technical and institutional rules.
  5. The distinctiveness of capitalism lies in the development of financial instruments and markets, especially mortgages lent against collateral: “Developed financial institutions make capitalism historically specific.”
  6. The Industrial Revolution was due to institutional evolution – mostly gradual but with some big moments of dramatic change such as the deal that brought about the 1688 accession of William and Mary.
  7. But the impact of external shocks – especially war – in bringing about economic development is under-appreciated.

I liked this observation about institutions: “They function as information registries of what is produced and owned, and of rules governing their use and allocation.” Hodgson cites Shannon and Weaver’s definition of information – something whose receipt can cause an action. This metaphor of units of information underlies the evolutionary approach, as I understood this chapter. Hodgson here and elsewhere has strongly argued the case for a paradigm shift in economics away from its still-extant physical production function framework to the evolutionary framework. (I do see the crumbling of the old paradigm in some respects but we’re far from a new one taking its place.)

The book ends, to my surprise, with a chapter about Japan’s economic development. I think the point here is that: “Major institutional changes in the fundamental areas that matter for economic development typically depend on exogenous shocks.” For Japan these were the Meiji restoration, then loss and occupation in 1945/6.

All in all, an interesting read, but it made me think I’d get more from reading one of Prof Hodgson’s earlier books on evolutionary economics.

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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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