December 30, 2007

Utility and Nothingness

Filed under: Economics, Philosophy — duncan @ 8:09 pm

Economics presents us as utility maximising agents – we give up certain things in order to get others, based on our assessment of the utility each will provide. The true cost of each choice is its opportunity cost – the alternatives this choice involves foregoing, each with their own utility.

One thing this model neglects, I think, is the total loss of the framework of utility that comes with death; and, similarly, the total loss of any choice between any alternatives. Death is the end of choice, and not an alternative like any other, with its corresponding pleasure or pain. It is a disruption or destruction of the entire system of pleasure and pain by which our lives are guided. But this disruption is also one of the most powerful motivating forces behind our economic behaviour.

Now, death may not be the end. More relevantly, people may not believe it to be the end. So apparently irrational economic behaviour could, theoretically, be analysed in terms of attempting to maximise utility after death. Also, the thought of death, and its consequences, is always an element of our current mental functioning. The thought of the prestige a glorious death would bring us, for example, is a pleasure we can enjoy here and now – and this pleasure may be enough to drive us towards self-sacrifice. Death may be the end of thought – but the thought of death, which is the only experience we ever have of it, is always a part of our living mental processes. So even the total destruction of thought, choice, pleasure, pain, etc, cannot be separated from the energies of life.

All the same, the ever-present possibility – indeed inevitability – of the loss of the framework we use to make decisions is a constitutive feature of this framework. It is something that is always factored in to our ways of making decisions – but which orthodox economics seems unable to take into account.

As an example, look at economics’ treatment of eating and drinking, the most basic forms of consumption. These behaviours are driven, we’re told, by their utility. Eating brings us pleasure, starving brings us pain – which indeed explains why people favour one over the other. But this framework ignores the more basic explanation for our behaviour and sensations – we need food and drink to live, and thus to experience any pleasure or pain at all.

Economics neglects this, I think, because the discipline finds it difficult or impossible to include the constitutive possibility of a model’s elimination within that model. How can you model for the model’s destruction? How can you model for a possibility which is, by definition, a possibility in which your model does not apply?

This is a very general problem. God knows the solution. But this kind of thing is worth bearing in mind, I think, as we wade through orthodox economic theorising – including such statements as: “All costs are ultimately opportunity costs.” (Krugman, Wells, Graddy, ‘Economics’, p. 7).

December 24, 2007

Ho ho ho!

Filed under: Self indulgence — duncan @ 7:32 pm

Apologies for not posting anything for ages. I’ve been moving house. More accurately, I’ve been moving from a lovely expensive flat to a slightly nasty room in a house full of strangers. This has two upsides. 1) I’ll soon be able to buy books. 2) I might eventually have time to read them.

Here is a festive picture (nicked from this ‘Words of Wisdom’ blog)

“What would you like for Christmas, Timmy? Common ownership of the means of production? Hmmm…  I’m afraid you’ve been too naughty for Utopia.  Have a Nintendo Wii.”

Merry Xmas!

December 9, 2007

Invisible Hand – fragments from the history of a metaphor. (Part Two: The History of Astronomy)

Filed under: Philosophy — duncan @ 8:27 pm

In his early, but posthumously published, ‘History of Astronomy’, Adam Smith gives a classic Enlightenment account of intellectual progress. “Philosophy is the science of the connecting principles of nature.” The events and objects of the world may appear to be governed by no law. But the philosopher or scientist can, through study and reasoning, uncover the “invisible chains which bind together these disjointed objects” and thereby “introduce order into this chaos of jarring and tumultuous appearances”.


Samina Malik sentenced

Filed under: Politics — Tags: — duncan @ 8:05 pm

On December 6th Samina Malik was given a nine-month suspended jail sentence. She has to carry out 100 hours of community work, and will be under observation for 18 months.

It could have been worse. The sentencing judge remarked that “In my opinion your offence is on the margin of what this crime concerns.”

But don’t start getting silly ideas. (Ideas like – the Terrorism Act is an appallingly authoritarian assault on freedom of speech and thought, its implementation is racist, and this racism was inherent in its conception.) “The Terrorism Act and the restrictions it imposes on personal freedom exist to protect this country, its interest here and abroad, its citizens and those who visit here. Its protection embraces us all, its restrictions apply to us all whatever our personal, religious or political beliefs.”

If you feel like becoming a criminal (U.K. readers only), you can download the al Qaeda manual here.

December 5, 2007

Shock Treatment

Filed under: Economics, Friedman, Politics — duncan @ 4:45 pm

Naomi Klein has published Milton Friedman’s 1975 letter to Pinochet. (via Robert Vienneau)

“Such a shock program could end inflation in months, and would set the stage for the solution of your second major problem – promoting an effective social market economy.
This problem is not of recent origin. It arises from trends towards socialism that started forty years ago, and reached their logical – and terrible – climax in the Allende regime. You have been extremely wise in adopting the many measures you have already taken to reverse this trend.”

Invisible Hand – fragments from the history of a metaphor. (Part One. Featuring a lot of googling and almost no real knowledge)

Filed under: Economics, Vitiated by Ignorance — duncan @ 4:43 pm

Over on Adam Smith’s Lost Legacy, Gavin Kennedy is fighting an infinite one man losing battle against the misattribution of the ‘invisible hand of the market’ doctrine to Adam Smith. Smith only used the phrase, Kennedy tirelessly asserts and reasserts, one time in ‘The Wealth of Nations’ – not discussing the market in general, but discussing an individual’s decision to invest in the domestic economy, rather than in riskier foreign ventures. Here’s the famous quote:

“By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”


December 3, 2007

Smith Precursor

Filed under: Literature — duncan @ 4:18 pm

“It may be that universal history is the history of the different intonations given a handful of metaphors.” – Borges.

“Come, seeling night
Scarf up the tender eye of pitiful day,
And with thy bloody and invisible hand
Cancel and tear to pieces that great bond
Which keeps me pale.” – Macbeth

[Underinformed comment possibly to follow]

Oh Fuck

Filed under: Economics, Politics, Sarcasm, Self indulgence, Vitiated by Ignorance — duncan @ 4:16 pm

No, I don’t understand. But as far as I can tell, three things are behind the current fears of a dollar rout and a world recession. America’s massive current account deficit is largely the product of 1) a hugely expensive war of choice, and 2) tax cuts for the wealthy. And the ongoing subprime crisis was mostly created by 3) deregulation. Am I missing something? And if not, could someone explain to me again why left wing economic policies are naïve?

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