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Yanis Varoufakis: The Neoclassical Economist as Playwright

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By Yanis Varoufakis, professor of economics at the University of Athens. Cross posted from his blog

In my previous post I explained that, over the past few weeks, I was frantically putting the finishing touches on a hopelessly academic book that reflects on my personal experiences with neoclassical economics; primarily through the lens of my own work which attempted to engage neoclassical colleagues on labour economics, game theory and political economy. Now that the task is finished, and the draft has been sent to my publishers, perhaps it may amuse some of you to read an extract from the concluding chapter; the only part (saving the Preface, which I already uploaded in my previous post) that is not riddled with equations, diagrams etc. In my attempt to sum up the book’s theme, I posed a strange question: If a sophisticated neoclassical economist ever attempted to write a play without violating neoclassicism’s basic tenets, what would that play be like? If interested, read on…

The Social Theorist as Storyteller

Now that all is said and done, and this book on my “personal encounter” with the discursive power economics builds on its gross theoretical failure is complete, perhaps the reader will allow me to conclude on a light-hearted, yet deadly serious, note.

Social theorists, whether we like it or not, are storytellers. We tell meta-stories the purpose of which is to help us understand a social world that is constantly under construction around us, and within which we are both active contributors and incessant interpreters. Incapable of a genuine Archimedean perspective, from which to judge simultaneously both our world and our account of it, we resort to analysing and re-analysing the sort of stories we tell ourselves about our selves.

This book has focused on one particular species of meta-story: that which dominates economic textbooks and discourse from the high school curriculum all the way to finance ministries and the boards of the too-big-to-fail financial behemoths. Having already subjected to critical scrutiny the neoclassical meta-story, and the Dance of the Meta-axioms which keeps it powerful and alive, I shall now end this book with an odd question: Given that drama is the ultimate, and most instructive, form of story-telling, what type of play or novel could a neoclassicist come up with without violating her neoclassical strictures? What would indeterminacy’s role be on her stage, or in the pages of her novel?

The Neoclassical Economist as Playwright[i]

It would not be remiss to imagine that the neoclassical economist tries to be for social theory what the playwright is to theatre: the creator of the plot, the designer of its every twist and turn, the author of a morality tale. At first, she introduces us to the cast of characters, their whims and preferences, their constraints and social location. Next, she sets the scene by developing the intricate web of interdependent decisions that forms their milieu – the grand, usually competitive, ‘game’ they are engaged in.

To pack dramatic punch, this grand game must feature multiple equilibria. Let me explain why: George Bernard Shaw, in the preface to one of his exquisite plays, wrote: “No conflict, no drama!” Hear, hear! To fashion genuine drama, our neoclassical playwright will undoubtedly feel compelled to weave an authentic conflict into its fabric. For this to be so, the ‘game’ that she places her characters in, must, so as to stay faithful to neoclassicism’s tenets, feature more than one equilibrium outcome. Imagine for a moment that it does not, and that each of her characters possesses a dominant strategy. If so, they will be facing no real dilemmas. Their dominant strategy may well instruct them to slaughter and to pillage, to wreak havoc and turn other people’s lives upside down. But the result will be crude, brutal theatre. Conflict contributes to a decent play only by allowing the audience to identify with even the worst villain. Interesting, mesmerising conflict involves a degree of inner turmoil the prerequisite of which is some form of… indeterminacy.

The neoclassicist’s conundrum here is, naturally, that indeterminacy is her sworn enemy. And yet, in attempting to write her captivating ‘play’, she realises that she cannot dispense with at least some indeterminacy. It is for this reason that multiple equilibria are, as I stated above, sine qua non for neoclassical theatre. The question now becomes: What constraints does a reliance on multiple equilibria impose upon the neoclassical playwright? We know that, by the very nature of neoclassical method, once the multiple equilibria are in place, the playwright’s characters have no alternative other than to resolve them by means of some form of randomisation. For if some other non-random mechanism were invoked, which rationalises in front of an audience the selection of one out of multiple equilibria, the whole point of having created a play with multiple equilibria is defeated.

Indeed, if the play’s leading character can reliably select a path among many competing ones without resorting to randomisation, it must be the case (at least in the neoclassical mind-set) that this path is, by definition, optimal and thus consistent not with multiple but with a unique equilibrium. But if this were so, the play is constitutionally dull, featuring characters whose path is predetermined (by the unique equilibrium available to them) and whose choices are, consequently, unrevealing of anything that may cause a ripple of excitement through the audience, or help them re-assess their own humanity.

Creative neoclassical playwrights may attempt to escape this conundrum by allowing their characters occasionally, and in the heat of the moment, to depart from instrumentally rational choices. In the parlance of game theory, the neoclassical playwright may introduce some ‘trembles’, or noise, in the characters’ behavioural pattern, hoping that this will complicate the plot sufficiently for the audience to find the proceedings absorbing. The question is: How absorbing would such a play really be?

I harbour no doubt that many Hollywood flicks are written in more or less this (neoclassical) fashion. In the tradition of John Wayne and Arnold Schwarzenegger movies, the screenplay is mostly predictable and the characters’ actions predetermined, save perhaps for a little randomisation reflecting the possibility that those in the weaker position err randomly into thinking that they stand a better chance than they really do (before being mowed down by the ‘hero’). However, such examples of ‘drama’ would not satisfy a sophisticated neoclassicist playwright or screenwriter who, outside her professional world, knows the difference between a good play (written for the screen or stage) and an impostor. The reason why offers a useful platform from which to reconsider neoclassical economics in general and its highest form, game theory, in particular.

At first, there is the problem with the use of multiple equilibria as a device for raising the dramatic tempo. How does the playwright resolve them? The equilibrium solution, demanded by neoclassicism’s Third Meta-axiom, is to have a unique mixed strategy equilibrium cutting the Gordian knot of indeterminacy by some optimal randomisation rule. Or that protagonists reach a settlement reflecting a Nash bargaining solution that equalises ratios of their utility functions’ first and second order derivatives. It would be as if Shakespeare decided on whether Macbeth would commit murder by tossing a suitably biased coin, or as if Sophocles had Antigone and Creon resolve their ‘disagreement’ by maximising the product of their utilities, and then writing the play according to the outcome. If our playwright rejects the mixed strategy Nash equilibrium solution (as I did in various chapters, beginning with Chapter 3), then the equilibrium story will either be devoid of tension (as the playwright will fall back on dominant strategies) or it will require external input for its completion (e.g. some Deus Ex Machina that introduces reasons, for the outcome, that are external to the ‘game’ the playwright set up). In view of our playwright’s need for tension but also her penchant, as a committed neoclassicist, for endogenous ‘closure’, she is left with no good option.

One escape route, suggested by the last paragraph, might be to consider the neoclassical method as the play’s grammar or background logic while the playwright’s imagination is permitted to look to some external source of inspiration for the actual course that the characters will trace out within that ‘grammar’ or ‘landscape’. Under this partial retention of equilibrium theory, the playwright is at liberty to deploy mixed strategies, Nash bargaining solutions, general equilibria, conventions that evolve in ways Evolutionary Game Theory can understand (recall the last chapter). However, the secret of the play is not to be found in any of these theoretical constructs. Although a play is possible that relies entirely on them, I for one would not enjoy it much. And I do not think that our neoclassicist playwright would either.

Rational Deviations from Equilibrium as the Prerequisite for Good Theatre

So, the identification of taxing dilemmas with multiple equilibria does not have to lead to boring plays, as long as the playwright first sets up the dramatic structure and then augments the equilibrium path that the dramatic structure generates with exogenously determined events. However, I fear that ushering in resolutions which are independent of that structure (as they would have to be, since the equilibrium foundations can neither depend on the resolution nor spawn a resolution) would not work at all well. This kind of play would require that the dramatic tension be structurally independent of its culmination. For those of us who think that a Deus Ex Machina resolution is detrimental to good theatre, the only decent alternative is to abandon the synonymity between hard choices and multiple equilbria, just as I abandoned the identification of the equilibrium strategy in the centipede game of Chapter 4 with the uniquely rational course of action.

Indeed, the discovery of rational non-equilibrium strategic choices in various chapters of this book (i.e. the possibility of perfectly reasonable patterned bluffs, mutations and deviant acts) introduces us to a different class of dramatic devices from which the playwright can build satisfyingly three-dimensional characters. The very possibility that Antigone can defy her dominant strategy rationally is what gave the famous play its genuine dramatic texture, focusing as it does the audience’s attention on not just Antigone’s dilemma but, also, on its own inconsistent views regarding what is rational, ethical and, in the final analysis, ‘right’. On the edge of their seats, the audience suddenly expect the unexpected at every moment since ‘uniqueness’ no longer guarantees determinism. They anticipate dramatic choices not only when the alternatives are equally inviting for the characters but even when they are not!

This is precisely the essence and beauty of deviant, yet fully rational, strategies; of the strategies that neoclassicism attempts to eradicate by means of its Third Meta-axiom. By undermining the characters’ perception of what rational people do, subversive behaviour may or may not reward those who adopt it with superior outcomes. On this account, Aeschylus raised Prometheus from the obscurity and banality of the Hesiodic tale by empowering him to experiment with a subversive, a deviant, an ‘out-of-equilibrium’ strategy. Of course, other more cynical interpretations are always possible. Prometheus could simply be suffering from imperfect information, in which case he would not have repeated his gift to humanity had he been given a second chance. Alternatively, he could have enjoyed martyrdom and accepted pain as a reasonable price for it. However, both these interpretations cheapen the character created by Aeschylus. No tragedy is worth its salt if it is based on the exploits of a hero who simply miscalculated, or who unexpectedly learnt how to derive masochistic pleasure when things turned differently to his original plan.

The above musings lead gradually to the conclusion that high theatre is impossible without radical indeterminacy, i.e. without neoclassicism’s nemesis which economists habitually, mostly unwittingly, try to put away by means of their Dance of the Meta-axioms. But even if we agree that indeterminacy is a prerequisite for a good play, it is certainly insufficient. Indeterminacy prevailed in Chapters 2 to 5, when the agents’ motivation was taken for granted. However, unless their praxes infect their motivation and influence their beliefs, there is no real theatre to speak of. Chapters 5 to 12 took account of this interdependence which, at once, builds on indeterminacy and takes it onto a higher plane of complexity. That escalation and decent into ever more radical indeterminacy was, at least from a self-respecting playwright’s perspective, apt and timely.

As every schoolchild knows, Macbeth adds crime to crime, as a result of successive choices that he ‘fell’ into when ‘murder’ was one of several options. He then emerges defeated while simultaneously victorious. When he achieves clarity toward the play’s end, he tells us that he wished his ‘beliefs’ were expunged:

Canst thou not minister to a mind diseas’d,

Pluck from the memory a rooted sorrow,

Raze out the written troubles of the brain,

And with some sweet oblivious antidote

Cleanse the stuff’d bosom of that perilous stuff

Which weighs upon the heart?

(Macbeth, V,iii,40-44)

But at the same time he re-discovers his dignity when forced to choose between death and humiliation:

…Lay on Macduff,

And damn’d be him that first cries, ‘Hold, enough!’

(Macbeth, V,vii,62-3)

The neoclassical interpretation is that Macbeth became involved in conflict due to imperfect information as to his opponents’ preferences and strengths; that he made his choices rationally given his priors of belief; that his choices had been hard because they belonged to sets of equilibrium strategies containing more than one element; that, perhaps, there was an element of the irrational in his deeds that took the form of some random ‘tremble’; some deviation from the optimal strategy which packs no significance in itself; and so on. All these suppositions are contentious because they wilfully ignore the possibility that a rational Macbeth could have chosen from the non-equilibrium strategy set as well (as I have contended in this book). None, however, is as contentious, and downright absurd, as the assertion that Macbeth’s choices left his personality unaffected, or that they affected him in a predetermined (even if stochastically so) manner. Once choice and action contaminate motivation, the latter cannot determine the former. Indeterminacy is, therefore, irrepressible not just as the stuff of good theatre but also as a prerequisite for human development.

Persons and Roles, Impersonators and Actors

The importance of praxis for deciding what kind of theatre (and social theory) we want becomes apparent when the repercussions of the acceptance of the neoclassical equilibrium story are considered. If tensions and dilemmas are the result of multiple equilibria, their resolution cannot be seen as a contributor to the character of agents. Macbeth’s tragedy is not so much about his fate and final destruction (i.e. it is not about the outcome per se) as about the transformation of his self through praxes – a transformation that the neoclassical story cannot even begin to conceive. Even if we approach the matter from an evolutionary game theory perspective (recall the last chapter), the neoclassical insistence that character variety is spearheaded by statistically uncorrelated ‘mutations’, or replication errors, amounts to the same thing: praxes are not causally linked to the evolution of character.

If we are to make room for this two-way process, from self to action and from action to self (the process that I call praxis), theatre regains its potency and meaning, although the neoclassical project sinks without a trace in a sea of radical indeterminacy. But what kind of theatre do we end up with? One possibility is a relativist open-ended script, in which the playwright lets the actors improvise and bring on the stage perspectives from their own lives. Together with neoclassical narratives concerning the outcome, such ‘libertine’ improvisation brings an end to any type of theory about how the play will end. Suddenly we are no longer in the realm of theatre but in something much closer to a multi-player video game in which the game’s author offers the environment but it is the players that collectively script the outcomes.

The input from the social world, the world of actors, or gamers, who have a life outside the ‘game’, or play, decides the outcome and there is no sense in considering the script as anything more than a basic skeleton which cannot be read independently and across different cultural milieus as transcendental (unlike for instance a play authored by Shakespeare or Sophocles). It is this post-modern relativism that neoclassicists of renown (particularly game theorists such as the formidable John Harsanyi) have sought to keep at bay by excluding from games anything that was not in the players’ utility payoff functions (that is, in the ‘script’). But he may have gone too far, killing off the very possibility of good theatre, of wholesome social theory, or even of a believable model of men and women. Is there an alternative to the choice between bad theatre and multi-player video games?

I think so. The claim buried deeply inside this book is that creativity and interest (in theatre as well as in the social sciences) can be restored without going to one of these extremes. There is, I submit, no need either to succumb to deterministic scripts or to go all the way to the other extreme, yielding to relativist, arbitrary, actor-imported narratives. The theory of deviant-cum-rational behaviour that unfolded through various chapters of this book opens up the possibility of having a complete, riveting script without determinism. The key is the admittance to the plot of twists that defy unique equilibria and in so doing capture the imagination. When one is faced with multiple equilibria, any odd choice will do; by observing the outcome you really learn nothing about the chooser’s character. It is only when the character reasonably and purposely deviates from some unique equilibrium path (akin to Prometheus’ theft of fire on behalf of humanity) that the writer is telling us something momentous about both the character and the human condition.

The readiness to infuse rationality with irrationality in the defence of deviance and rebelliousness brings to mind another dimension. In a ‘neoclassical’ theatre production the actor sheds her own personality, steps into the predetermined role, and struggles to impersonate some character whose entire presence flows from the script. The playwright chooses how to weave the plot and the actor attempts to be the person who actually does the weaving. However, in high theatre, rather than impersonating characters, actors personify them.

My preference for scripts which depict and rationalise non-equilibrium choices is well suited to complementing this distinction; to actors that personify rather than merely impersonating. This way, actors can bring on stage their own interpretation of the inner conflict that characterises the choice of some deviant strategy with no need for an open-ended, relativist, multi-player video game-like, script. Since the coexistence of Reason and Unreason in the same behavioural pattern (recall Chapter 6) is inherently confusing, the actor can draw from her own past whatever is necessary to convey the intensity of such choices. Neoclassical theory cannot (because it will not) account for that intensity, thus devaluing, quite inadvertently, the actor’s contribution to the play.

Does any of this matter? I think it does, and that Macbeth offers a good example. For he demonstrates that, often, it is obligatory that in order to understand conflict in the social world around us, we must look into a conflicted heart overseen by a bright mind. If we are to do so without abandoning the realm of rational analysis, the only option is to enrich our perception of it. Rejecting neoclassical equilibrium analysis is an excellent start along this path.

______

[i] My idea of imagining how a neoclassicist playwright would go about her business of writing her play first occurred to me when I was writing my 1991 book Rational Conflict. See pp. 196-200).

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27 comments

  1. Mark P.

    ‘Macbeth’s tragedy is not so much about his fate and final destruction (i.e. it is not about the outcome per se) as about the transformation of his self through praxes – a transformation that the neoclassical story cannot even begin to conceive.’

    That is nicely observed.

    In fact, I like most of this. Of course, in real life not only are neoclassical economists entirely uninterested in all this stuff, but their whole game is aimed entirely and only at selling us on some (specious or unsatisfactory) interpretation of what our available utility payoff functions are — some version of ‘There Is No Alternative,’ or TINA.

    Of course, too, that is your point.

    But, boy, you could have said that more directly — though perhaps in the context of your whole book this plays as the right coda — and what you have is sure going to fly over the heads of many NC readers, whose acquaintance with game theory is entirely derived from Adam Curtis’s cartoon version. (i.e. “Game theory and Nash equilibria are the work of that sociopathic Satan, John Nash.”)

  2. craazyman

    well MacBeth obviously never had xanax with about half a bottle of wine or he’d have never got going in the first place.

    or maybe he would have. envy envy and ambition

    Veryy clever Professor Varoufakis!

    All these people are Isaac Newton’s deluded mind children, but without his comprehension of holistic and vast ideas of order. They think you can parse things down into reductive parts, grinding smaller and smaller and smaller, disintegrating them (figuratively and litterally) into elements small enough to be manipulated through “logic” and “rationality” into optimal outcomes borne from the convenience of easy calculation

    ha ha. Every artist knows that things of the mind exist, wholly and in full, wild, chaotic and vibrantly empowered, as irreducible forms that can’t be disintegrated and manipulated without losing every element of their being. they either are or are not and every person has to navigate them and their energies. call them demons, angels, archetypes, whatever, but they are never in equilibrium nor are we, ever.

    the entire project to rationalize this is so comical it almost ends discussion with fits of laughter. but then you read the news and it’s not so funny. oh well, if it wasn’t this it would be something else, some king, some tribe, some prince, some altercation among dukes or war lords. today we have neoclassical economics, yesterday it was nationalism, before that it was tribalism, and before that it was something no doubt.

    1. from Mexico

      craazyman says:

      “All these people are Isaac Newton’s deluded mind children, but without his comprehension of holistic and vast ideas of order.”

      I think that’s right. We aren’t all playing with the same deck of cards. In the real world some people are playing with a deck that’s a few cards short. Mainly what we’re talking about here are people who come up short on hearts. And in fact, some people have no hearts at all. I’m reminded of something Martha Stout wrote in “The Sociopath Next Door”:

      ***beginning of quote***
      Imagine — if you can — not having a conscience, none at all, no feelings of guilt or remorse no matter what you do, no limiting sense of concern for the well-being of strangers, friends, or even family members. Imagine no struggles with shame, not a single one in your whole life, no matter what kind of selfish, lazy, harmful, or immoral action you had taken.

      And pretend that the concept of responsibility is unknown go you, exept as a burden others seem to accept without question, like gullible fools.

      Now add to this strange fantasy the ability to conceal from other people that your psychological makeup is radically different from theirs. Since everyone assumes that conscience is universal among human beings, hiding the fact that you are conscience-free is nearly effortless…

      How will you live your life?

      What will you do with your huge and secret advantage, and with the corresponding handicap of other people (conscience)?
      ***end of quote***

      1. JEHR

        Yes, from Mexico, that quotation describes very nicely Lloyd Blankfein, Jamie Dimon, Robert Rubin, et al.

    2. Hypothetical_Taxpayer

      Makes you wonder why everyone hasn’t already decided any attempt at coming up with an accurate and workable macro-economic framework is an inherently ridiculous idea. The “Stable Economy Model – No Equilibrium Necessary – Fortified With Lots Of Healthy Freedom And Democracy”. And it’s all done with computers. Don’t think I’ll hold my breath.

      Still waiting for someone to write the prequel to the current Greek tragedy. That could actually be useful.

      Coincidently, I’m reading the new John Scalzi sci-fi novel, “Redshirts”. In the 25th century some crewmen aboard the fleet flagship slowly come to the realization that somehow their timeline and reality has been co-opted by TV screenwriters and their lives exist to act out a cheap drama for the benefit of an audience somewhere. The TV show seems to be a crappy knock off of Star Trek. There are dangerous “away missions” for the necessary conflict to entertain the audience. The 5 stars of the show (the officers) never die no matter what. The main characters in the novel are the extras, whom come to realize their purpose in life is to get killed off for dramatic effect. Funny stuff.

      1. craazyman

        sounds like the old Star Trek landing party.

        When some clean cut dudes you never saw before, armed with phasers, materialized with Kirk and Spock on a strange planet behind some rocks for protection, you knew it wouldn’t be but 15 seconds before they’d be toast.

  3. from Mexico

    Neoclassicists reduce human drama to a cartoon where simplistic, uni-dimensional characters perform to a script whose outcome is already known.

    Or as the psychologiest Andrew M. Lobaczewski put it: “In their conceptual world, pathocrats consider it virtually self-evident that the ‘other’ should accept their obvious, realistic, and simple way of apprehending reality.”

  4. jake chase

    Neoclassical economics makes perfect sense as propaganda and no sense as anything else. Once you destroy the assumptions (which takes little more than an hour, perhaps less) there isn’t much left to discuss.

    The reason so many people seek to build a career on it is pathetically simple: toadyism pays, but neocassical economics doesn’t even have the dignity of public relations, which at least has the science of Gustav LeBon to its credit.

    Good luck with your book.

  5. diptherio

    Stories We Tell Ourselves: my philosophical take on a similar theme:

    …These stories of economics and of consumerism, unlike the old stories of religion which they have replaced, have no end to them; they are stories empty of meaning and import; they have created entire generations of spiritual paupers.

    The new story goes like this: try to obtain as much money as you can for as little work as possible; use this money to buy many things for yourself; repeat this process until you die. The story is simply, “he who dies with the most toys wins.” But this story does not ennoble us, does not open to us our higher potentialities. This story tells us that we are nothing but empty stomachs, no more than hungry ghosts. But humanity does not live by bread alone and cannot find fulfillment in a new car or television set, or in second house or a dress or a dishwasher. We require more, but the stories we now live by have no more to offer.

    The story of religion, that we need desperately to remember, to incorporate into our lives, is this: do whatever work comes to hand, for all work is necessary; use the money you get from this work to care for as many of your fellow creatures as you can, for all are children of one family; do your best to turn yourself into a being of pure Love, for that is the highest that a human being can attain. This is a story with meaning, an ennobling story, and a story that needs to be told over and over again.

    Stories are important; we know ourselves and our world only through the stories that we tell. The tales that modern society has provided us have shown themselves empty.

    1. jrs

      Only vast quantities of the work done in this society are actually unnecessary (is advertising necessary, building weapons, doing math on derivatives?). What if no work comes to hand? With the official and real unemployment rates these days, that’s also a possibility.

  6. Bebob

    The process of transduction is fascinating, the result allows consideration of various individual elements as abstractions of an original source and is theoretically as applicable to mental constructs as physical information. I enjoyed learning that this inspiration occurred to Yanis over 20 years ago and that its lasting effect remained worth taking the time to realize.
    The quest for realism is a universally human trait. Proposing that realism is convertible into other mediums is explained as a psychological bias that validity is directly related to causal sequence altered only by the transferring medium. I agree with the assumption that parameters must be carefully measured to assure any specific results to realistically be related to their origin. The whole process is problematic and complicated by the fact that terms being changed become a perceptual equivalent of preexisting values. Weaknesses in the emerging result may arise from the source, conductor,recording medium or any and all of these factors.
    While this is surely a dilemma, the approach of framing criticism as to where the lack of realism originates is particularly insightful. If for example,a source doesn’t elicit all the parameters that indicate actual validity or existence under no circumstances will it successfully transduce into a medium that requires attributes it cannot stimulate.
    This book deserves attention, it appears to offer greatly needed academic reform.

  7. Susan the other

    Ah ha! Very heavy, professor. You lost me completely but I instinctively know that you are clearly right. What we need is a hero who simply miscalculated. If he/she admits it, it will be a tragedy; if he/she denies it it will be a comedy. I prefer comedy because it deals with perpetual imbalance. As you seem to advocate. But the writer of this new play might want to go beyond subtle theater of the absurd and embrace Theater of the Utterly Hapless. Like… Six Characters in Search of an Author, or even better, Lock Stock and Two Smokin Barrels. Neoclassicists mistake comedy for drama. That’s the problem. They need to get serious…

  8. allcoppedout

    It’s easy enough to write the saga from our side Yannis. The neo-con/theoclassicals are a fine set of black hat villains playing Dr Stangelove’s game. They turn out to be alien lizards. We are the underground rebels like Donovan in ‘V’. What we lack is the standard method of the sci-fi rebel – flying a missile into the rear entry of the enemy mother-ship.
    In reality our economics is no weapon at all.I haven’t seen much attempt to get at many of the assumptions such as work ethic, private property and how we might change things without creating an iron bureaucracy.

  9. Jim

    “The claim buried deep within this book it that creativity and interest (in theater as well as in the social sciences can be restored with out going to one of these extremes. There is, I submit, no need either to succumb to deterministic scripts or go all the way to the other extreme, yielding to relativist, arbitrary, actor imposed narratives”

    Lets go, for a moment, to the dreaded relativist extreme.

    Do the nihilistic outcomes of simply interpretation mean there are no criteria for truth or that the criteria might be historical rather than metaphysical?

    Does truth primarily depend upon persuasion?

    Is truth a matter of shared acceptance?

    Can we say we do not agree because we have found the truth (outside) or can we say we found the truth when we agree?

    Is truth less a reflection and more of an event grounded on a plurality of interpreters and their agreement or disagreement?

    Is freedom and democracy always threatened by metaphysics?

    Is emancipation possible without loosening the metaphysical grip?

    1. from Mexico

      Let’s explore your questions with the use of a fable.

      We will use a modified version of the fable of the Scorpion and the Frog.

      The Scorpion and the Frog is a fable about a scorpion asking a frog to carry him across a river. The frog is afraid of being stung during the trip, but the scorpion argues that if it stung the frog, the frog would sink and the scorpion would drown. The frog agrees and begins carrying the scorpion, but midway across the river the scorpion does indeed sting the frog, dooming them both. When asked why, the scorpion explains that this is simply its nature. The fable is used to illustrate the view that the behaviour of some creatures, or of some people, is irrepressible, no matter how they are treated and no matter what the consequences.

      The neoclassical fable is reductionist to the extreme, and all humans are scorpions. Our fable, however, is a little bit less reductionist and there are two distinct groups of humans, Frogs and Scorpions. The Scorpions assert that they are rational maximizers, and the Frogs have no reason to disbelieve this. Also the Frogs and the Scorpions live in a village where there are 100 Frogs and 10 Scorpions, but the Scorpions rule because they have stingers.

      Now let’s say that when the drowning incident described above happened, there was another frog who was hidden in the bushes that saw the event. He goes back and relates this story to the other frogs. Then a while later this happens again, and again, and again, so that after a while 10 frogs have witnessed a similar drowning accident.

      Now the Frogs have a town hall meeting.

      One frog is embued in the philosophy of epistemic relativism. He argues that all truth claims have equal validity. The truth claim of the Scorpions — that they are rational maximizers — therefore is just as valid as the testimony of the 10 Frogs who have witnessed scorpions self-destruct and other-destruct.

      Furthermore, the epistemic relativist is far more persuasive than any of the 10 Frogs who have witnessed the drowning incidents. The 10 Frogs argue that what the Scorpions are saying is not true. They argue that, even though the Scorpions have stingers, that the Frogs can, if the cooperate, overpower them because of their superior numbers. But all to no avail. The epistemic relativist carries the day with his superior persuasive abilities, and a majority of Frogs vote to do nothing.

      So here are some questions for you.

      1) Was the Scorpions’ truth claim — that they are rational maximizers — true or false?

      2) Was the 10 Frogs’ truth claim — that the Scorpions are not rational maximizers — true or false?

      3) Did the truth claims of the Scorpions and the 10 Frogs have equal validity?

      4) Was the epistemic relativists’ truth claim — that all truth claims have equal validity — true?

      5) Because the epistemic relativist had superior persuasive abilities, did that make his truth-claim true?

      6) Because a majority of Frogs decided that the epistemic relativist’s truth-claim was true, did that make it true?

      1. skippy

        As always – death – is the absolute motivator.

        Skippy… Can we pretty please have a non death motivator… before… its curtain song.

      2. JTFaraday

        That story works as a self contained model, but it doesn’t work as a good analogy for our current Scorpion Situation, because our rational maximizer Scorpions aren’t euthanizing themselves, they’re swimming away and going about their business.

        It doesn’t make the Scorpions good citizens, but the Frogs don’t care about citizenship. They only care about having jobs ferrying the Scorpions across the water.

        So, what can our rational maximizer Scorpion do? It just hops on the back of the next stooopid Frog.

        Meanwhile, the rational maximizer technocratic snakes who speak with forked tongues are holding their own town meetings.

        If Author can’t even get the contemporary morality tale right, it’s not going to matter what the stooopid Frogs’ epistemic proclivities are.

  10. john c. halasz

    Well, there is this old book:

    .google.com/books?id=iofNb-7rgTUC&printsec=frontcover&dq=roy+”philosophy+of+economics”&source=bl&ots=ibUa8mOH4h&sig=mSLhu9fxADrCjpFPEJCNl5p_68o&hl=en&ei=VlqcTMTdHMKB8gaIyLF4&sa=X&oi=book_result&ct=result&resnum=1&sqi=2&ved=0CBIQ6AEwAA#v=onepage&q&f=false

    The author studied at Cambridge U. in East Anglia in both philosophy and economics. And though it might seem a bit outdated, given all that has subsequently happened, the author’s take, which is clearly Wittgensteinian, on “listening in” on the discourse on or of economics is still worth considering.

    In particular, he suggests that “philosophers” (et alia) can be divided into to kinds: humeans and aristotelians, (with the absence of capital letters indicating a broad division, rather than any specific “school”). And he specifies the difference as humeans believing that only means are amenable to human reasoning and not ends, whereas aristotelians believe that ends belong within that scope and affect the determination of means.

    But I would amend that proposal, (leaving aside that kantians are an odd hybrid between those two basic kinds), to emphasize the difference between the two basic conceptions of human agency, (a.k.a. “freedom”). The humean conception of agency is simply desires + (cognitive) beliefs. That is, given any arbitrarily posited desire, agency is merely a matter of determining cognitively the external conditions that prevail, in terms of realizing that desire. But aristotelians think that desires and beliefs interpenetrate, such that what one desires and what one believes condition each other. Which leads on to the notion that desires and cognitions admit of some sort of “ranking”, between “higher” and “lower” desires,- (and thus the desirablility of ends),- and, correspondingly, between different “forms” of knowledge, based on the underlying ends, the “projects”, that under-write them. Marxian notions of “false consciousness”, for example, which have given such offense to notions of “pure” theoretical intentionality, beloved of economists, depend an “aristotelian” perspective. But the “humean” perspective lends itself to adaption to the status quo, rather than to any perspective that might attempt to “transcend” it.

    But regardless of the structural complexities that might result from different basic conceptions of agency, the failure of “standard” humean economics to foresee and remedy the current global debacle, suggests that its underlying project, in terms of the desirability of the implicit, underlying ends that it projects, might be still worse than its merely cognitive failures.

    The suggestion is that mainstream, neo-classical economics might have far more in common with Babylonian astrology, than anything like an authentic social “science” .

  11. Jim

    From Mexico:

    The scorpion explains that “this is simply his nature.”

    The first lines of Aristotle’s Metaphysics says more or less that the wise man is the all-knowing man and he knows all because he knows the primary causes–in this fable “that this is simply his nature.”

    We tend to be partial to fixing a stable entity (this is simply his nature).

    By claiming to tell me the absolute truth of scorpions (this is simply his nature) the fable creator is demanding from me unquestioning submission.

    I tend to be partial to the ideal of the development of human society through the gradual reduction of all the rigidities that set us against one another, especially the excessive absolutization of things naturally given.

    1. from Mexico

      Which brings us to another point, which is that the scorpion makes two contradcitory truth claims regarding his own nature.

      1) He first claims that “if it stung the frog, the frog would sink and the scorpion would drown.” In other words, here the scorpion is asserting he is a rational maximizer.

      2) Later, however, after he stings the frog carrying him across the river, causing his own demise, he makes an entirely different truth claim. He asserts that “this is simply my nature.” Here the scorpion is asserting that he is not a rational maximizer.

      Both of these truth claims come from the same individual. Both speak to the nature of scorpions. Both cannot be true.

      Your epistemic relativism — your truth claim — is that both truth claims have equal validity.

      But do they?

  12. Jim

    From Mexico:

    The perspective I have taken is often criticized as an irresolvable dilemma( a call for human liberation that accepts the interpretive character of truth while not taking its own position as absolute).

    A resolution begins to emerge with the transformation of philosophy into an ethic of interpretation.

    Since we do not know for sure we must act as generously as possible.

    1. from Mexico

      You seem to be on some Quixotic quest to answer the leading moral question philosohers are routinely asked: “Is anything absolutely right, or absolutely wrong — and if so, how would I know it?” But I think “the transformation of philosophy into an ethic of interpretation” is a lot farther from “a resolution” of this question than what you might believe. Moral principles are never absolute. But to argue that moral principles are never absolute is not the same as to argue that morality is not possible.

      For instance, you employ your epistemic relativism — “Since we do not know for sure” — to justify a moral absolute: “we must act as generously as possible.” It’s the latter that I have a problem with, because this moral absolute, when put into practice, opens up a whole new can of worms. As Ernst Fehr and Urs Fischbacher explain, the “unconditional altruists” do nothing to check the behavior of the selfish types. Quite the contrary, the selfish types are kept in line not by the unconditional altruists, but by the strong reciprocators:

      ***beginning of quote***

      Theory as well as empirical evidence suggest that the interaction between strongly reciprocal and selfish types is of first-order importance for many economic questions. The reason for this is that the presence of reciprocal types often changes the economic incentives for the selfish types, which induces the selfish types to make ‘‘nonselfish’’ choices. For example, a selfish person is deterred from behaving opportunistically if the person expects to be punished by the reciprocators. Likewise, a selfish person may be induced to behave in a cooperative and helpful manner because she expects the reciprocators to return the favor. Since the presence of strongly reciprocal types changes the pecuniary incentives for the selfish types, the strongly reciprocal types often have a significant impact on the aggregate outcome in markets and organizations.
      http://ompldr.org/vOHU2cA
      ***end of quote***

      The unconditional altruists labor under the fiction that punishment is not costly for the punisher. This delusion allows them to claim moral superiority for their “generosity” when in reality the strong reciprocators may be more generous than they are.

  13. Jim

    From Mexico:

    The challenge of balancing philosophy and politics is one we all face.

    In your original incarnation at NC you were, for example, a vociferous crictic of MMT. You seem to have made some type of conversion to social democracy and the necessity of a strong state lead by experts.

    If my intuition is accurate, to what do you attribute your conversion?

    I have taken a somewhat different path. I tend to seem myself as a democratic populist with sympathies towards anarchism–consequently a politics without metaphysical foundations seems, to me, worthwhile exploring.

  14. Aygul Ozkaragoz

    Aygül Özkaragöz | February 7 2:09pm
    Based on this opinion piece, one can only infer that the politicians, regulators and the bankers are all fiddling, while ‘Rome is burning’. Be that as it may, how come there is no FDR, who reportedly ‘saved capitalism, despite/from the capitalists’.? What about the upshot of the S&L debacle of a thousand perpetrators successfully prosecuted? Could it be some other forces are at play in this depression-like crisis? The new banking sector with its ‘shadow’ component, declining productivity, disintegrating hegemony of the U.S. may have all conspired to reconfigure the world that we have known. In this new world, the Geithner doctrine may just be one of the only familiar set of tools to jump start the broken economy. The question is will it?

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