Posts Tagged ‘modernism’

allende01

Critics of capitalism and capitalist alienation (such as Chris Dillow) may have given up on the possibility of noncapitalist planning too quickly.

Part of the problem is, planning has become identified with the grandiose 5-year plans and top-down decisionmaking associated with the state capitalism of the Soviet Union. However, what if there are other models of planning?

One such example is Cybersyn [ht: tm], the cybernetic planning system that was conceived in Salvador Allende’s Chile (but never completed before his violent overthrow) to cope with the “messy jumble of factories, mines and other workplaces that had long been state-run, others that were freshly nationalised, some under worker occupation and others still under the control of their managers or owners.”

Clearly, as Greg Borenstein and Jem Axelrod explain, the Chilean experiment, as designed by British cybernetics-management consultant Stafford Beer, was a model of ultramodernist omniscience and ominpotence. I wonder what a postmodernist model of planning for a noncapitalist economy would look like today.

Nate Silver is my favorite statistician precisely because he understands the fundamental importance of uncertainty:

The Weather Service has struggled over the years with how much to let the public in on what it doesn’t exactly know. In April 1997, Grand Forks, N.D., was threatened by the flooding Red River, which bisects the city. Snowfall had been especially heavy in the Great Plains that winter, and the service, anticipating runoff as the snow melted, predicted that the Red would crest to 49 feet, close to the record. Because the levees in Grand Forks were built to handle a flood of 52 feet, a small miss in the forecast could prove catastrophic. The margin of error on the Weather Service’s forecast — based on how well its flood forecasts had done in the past — implied about a 35 percent chance of the levees’ being topped.

The waters, in fact, crested to 54 feet. It was well within the forecast’s margin of error, but enough to overcome the levees and spill more than two miles into the city. Cleanup costs ran into the billions of dollars, and more than 75 percent of the city’s homes were damaged or destroyed. Unlike a hurricane or an earthquake, the Grand Forks flood may have been preventable. The city’s flood walls could have been reinforced using sandbags. It might also have been possible to divert the overflow into depopulated areas. But the Weather Service had explicitly avoided communicating the uncertainty in its forecast to the public, emphasizing only the 49-foot prediction. The forecasters later told researchers that they were afraid the public might lose confidence in the forecast if they had conveyed any uncertainty.

Since then, the National Weather Service has come to recognize the importance of communicating the uncertainty in its forecasts as completely as possible. “Uncertainty is the fundamental component of weather prediction,” said Max Mayfield, an Air Force veteran who ran the National Hurricane Center when Katrina hit. “No forecast is complete without some description of that uncertainty.” Under Mayfield’s guidance, the National Hurricane Center began to pay much more attention to how it presents its forecasts. Instead of just showing a single track line for a hurricane’s predicted path, their charts prominently feature a cone of uncertainty, which many in the business call “the cone of chaos.”

Silver also understands how uncertainty can be undermined:

Unfortunately, this cautious message can be undercut by private-sector forecasters. Catering to the demands of viewers can mean intentionally running the risk of making forecasts less accurate. For many years, the Weather Channel avoided forecasting an exact 50 percent chance of rain, which might seem wishy-washy to consumers. Instead, it rounded up to 60 or down to 40. In what may be the worst-kept secret in the business, numerous commercial weather forecasts are also biased toward forecasting more precipitation than will actually occur. (In the business, this is known as the wet bias.) For years, when the Weather Channel said there was a 20 percent chance of rain, it actually rained only about 5 percent of the time.

The same is true in the discipline of economics, where generations of modernist practitioners have attempted to domesticate and contain uncertainty (in the form of probabilistic certainty) instead of allowing it to flourish (and dealing with the resulting effects on their concepts and methods).

As Silver explains, “It’s much easier to hawk overconfidence, no matter if it’s any good.”

 

His book may be called The Assumptions Economists Make but, to judge by the interview with author Jonathan Schlefer, his book is not about economists in general. It’s really about modernist economists.

Modernist economists are the ones who think the only way to do economics is by building models, evidently a view shared by Schlefer himself, who thinks of economics in terms of “progress” and believes that the debates over Keynes would have been avoided had he just formulated a “clearer” model.

Q. To what extent do you see a “march of progress” in the efforts of successive generations of economists to build useful models of the real economy?

A. There is a kind of progress in economics. Critics point out flaws in models; supporters revise the models to respond; and the models do become sharper. For example, John Maynard Keynes’s “General Theory” was a brilliant book, but his model was somewhat muddy, if you even grant that he had a model per se. If his model had been clearer, there wouldn’t have arisen so many disputing schools of “Keynesians” (with various prefixes and suffixes to distinguish themselves). But whichever side you’re on in these disputes, the models favored by different sides have become sharper and the bases of disputes clearer.

That’s precisely the modernist conceit in economics: that economic knowledge progresses (Samuelson would add, “funeral by funeral,”) and that modelling is the way to guarantee the continued “march of progress.”

To give him credit, though, Schlefer does recognize the problems with equilibrium modeling and the danger for policy of neoclassical models of the labor market.

There is a model — a bad one, I argue — that says free markets determine income distribution, and if you try to interfere, you only cause harm. In a 1980s edition of his seminal textbook “Economics,” the Democratic economist Paul Samuelson declared that unions and minimum-wage laws cause unemployment, while “a labor market characterized by perfectly flexible wages cannot underproduce or have involuntary unemployment.” When not only free-market economists like Milton Friedman but also somewhat more interventionist economists like Samuelson took this line, they gave intellectual legitimacy to the attack on unions and minimum wages and thus supported the politics that worsened income inequality.

Mark Tansey, "Doubting Thomas" (c. 1985)

Having raised the issue of postmodernism earlier today, the question is: is postmodern relativism responsible for the ability of the “merchants of doubt” to challenge the scientific evidence concerning such issues as tobacco smoke and global warming?

Yann Giraud thinks not. His view is that the distinction between Science (which is “published in leading, peer-reviewed scientific journals” and “carefully researched by devoted—meaning, disinterested—scholars”) and “science” (which is “published in the New York Times or in the Wall Street Journal” and “conceived during business meetings by resentful, outdated researchers”) is problematic. Why? Because “forces and networks are what are responsible for the stabilization of knowledge in any field, not only facts and evidences.”

A better story would have investigated the various networks through which not only businesses try to affect scientific research to sell their products but also, in return, the equally powerful networks scientists can create to respond to these attacks. Also, a more satisfying narrative would show that the “bad” scientists who promote cigarette smoking and polluting industries also use the rhetoric of scientific evidence in order to convince. After all, is this “merchants of doubt” phraseology really different from the Popperian perspective, which asserts that we can never fully prove anything and that the only thing that can be done is to reject scientific ideas? Is it relativism that really hurts here or its philosophical counterpart? Is that “merchant of doubt” ideology the skeleton in the positivist closet? Can we talk about those dangerous modernists, now?

Indeed!