John Quiggin on þe End of Neoliberalism, & BRIEFLY NOTED:
For 2022-12-12 Mo
CONDITION: End of Semester:
And every single academic committee must hold its meeting RIGHT NOW!
FIRST: John Quiggin on the End of Neoliberalism:
Very flattering to get such attention:
John Quiggin: The slow demise of neoliberalism: How the all-conquering movement contained the seeds of its own destruction: ‘DeLong personifies the schools of thought within the capitalist world as being those of Hayek (“The market giveth, the market taketh away; blessed be the name of the market”) and Karl Polanyi (The market was made for man, not man for the market)…. While Hayek opposed all forms of government intervention in the economy as a “road to serfdom,” Polanyi argued that people “had rights to a community that gave them support, to an income that gave them the resources they deserved, to economic stability that gave them consistent work.” Within this schema, the decades following 1945 (Les Trente Glorieuses, as the French call them) can be seen as the period in which this tension was resolved by the combination of Keynesian macroeconomic management and the social-democratic welfare state…. But the tables were turned in the space of a few years. Hayek triumphed in the 1970s, both in DeLong’s symbolic terms and as the intellectual star of the decade…..
This account leaves DeLong, and his readers, with two big problems. First, did technological progress really cease to work after 2010 and, if so, why? Second, why was a relatively short burst of high inflation enough to overthrow social democracy yet decades of poor economic performance insufficient to generate an alternative to neoliberalism? On the first question, I am a bit more optimistic than DeLong…. Information is a “non-rival” produc…. Traditional measures of output, income and consumption become less and less relevant….
On the second question, DeLong argues, correctly I think, that social democracy was a victim of its own success…. Neoliberalism promised a return to prosperity. By the time it became clear that this promise would not be realised, expectations had been lowered so much that (for example) a 5 per cent rate of unemployment was seen as a success rather than the disaster it would have been perceived as in the 1970s. Again taking the optimistic view, we are seeing a gradual rehabilitation of the institutions of the mixed economy…. Perhaps we can finally put the era of neoliberalism behind us.
Slouching Towards Utopia: An Economic History of the Twentieth Century
By J. Bradford DeLong | John Murray | $34.99 | 624 pages
The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism
By Sebastian Edwards | Princeton University Press | US$32 | 376 pages
The information age point is, I think, a very good one.
Perhaps this is the way to put it:
If you are producing a "rival" commodity, something that costs real resources to make another copy of and that can only be used by at most one person at a time, the ratio of user surplus to factor cost—the resources consumed and the money paid to produce the commodity—is of the order of magnitude of one.
But for an information-good, paid for by the fumes off of advertising dependent on the users. attention, the ratio is much much larger: perhaps on the order of 10. (Although we really do not know: we do nothing but guess here.)
Thus we have the prospect of an acceleration of wealth perceived as real user values, even as factor reward, values rate of increase slows to a crawl.
An attention economy is a very odd beast.
I do not think we have a good handle on it.
I want to agree with John, and maybe I will—after I purchase and put on my meta-verse glasses. But when I buy a rival, good, I know that it is something I want to pay attention to. By contrast, I find the infosphere pushing me lots of the time to pay attention to things that, afterwards, I am sorry I did.
Things are very complex. I do not think I have a very good handle on them.
With respect to the second of John's main points in the passages I quote, I am also much less optimistic than he is.
It would be very nice to go back to social democracy: the shotgun, marriage of von Hayek and Polanyi, blessed by John Maynard Keynes. Certainly neoliberalism has not delivered for anyone—except the plutocratic rich, whose wealth it has amplified to a degree that I would say is almost beyond the dreams of avarice, save that the dreams of avarice seem to have no limits whatsoever.
But the failure of neoliberalism has not led to a movement to restore, social democracy.
Rather, the dominant vibe seems to be:
Economic growth is too slow for us to be able to afford to pay the citizens’ benefits envisioned by social democracy.
Besides, too many of those benefits go to those who do not deserve them—to the moochers and slackers.
Thus social democracy’s benefits are too dearly bought, at a price that society is unwilling to pay.
Yes, this is a strange pattern of thought. But it is out there…
I find myself thinking that what I really need to do is go back and reread my Friedrich Engels. I need to think about how changing technology induces changes in the forces of production that then require changes in the relations of production which have consequences for the political-social-cultural superstructure built on top of that.
Plus the changes in the long 20th century have come so damn fast.
Starting in 1000, it was was 650 years from feudal to commercial gunpowder-empire society, and then 220 years from commercial gunpowder-empire to steam-power society. You have time to experiment with different modes of organization, communication, and governance built on top of the changing mode of production. You have time to see what works—or at least what does not catastrophically crash—and for things to reach rough equilibrium, or at least stable trench lines.
But then we only have 40 years from the steam-power mode of production to the second-industrial-revolution mode. And then there are only only 40 years from second-industrial-revolution to mass-production, 40 from mass-production to global-value-chain, and we are now clearly on the way to a dimly visible info-biotech mode of production. And each of these within-40-year shifts looks to me to be of the same order of magnitude as the shift from the feudal to the commercial gunpowder-empire mode of production.
The overwhelming piece of change has consequences: you cannot claim that any sort of equilibrium has been reached between forces and relations of production, or between relations and superstructure, as you could claim had been reached in the transition from feudal to commercial gunpowder-empire or from commercial gunpowder-empire to steam-power modes of production.
All this is to say that I fear there was a very strong elective affinity between mass production and mid-20th century social democracy.
Without those underpinnings, stable social democracy may well be next to impossible.
But I do not know how to make this argument convincing, or even what it is. I just sense that there is an argument there, but they will be correct .
Perhaps I should ask GPT-Chat…
MUST-READ: Adam Gurri on þe Case Against Dictatorship:
Very nicely done:
Adam Gurri: The Case Against Dictatorship - Liberal Currents: ‘Democracies… are sclerotic, indecisive, and dithering; by contrast, states ruled by strong and capable dictators are capable of rapid policy change–or so it is argued…. It is China’s system, rather than a monarchy or the fascist state, which stands as the alternative to liberal democracy…. Regimes blunder…. But contrary to Mussolini and less nefarious critics, liberal democracy does have important structural advantages over its rivals that are too often overlooked…. Every society faces crises… [that] produce broad unrest among the highly capable “modular” masses, as well as among elites. Liberal democracies have the mechanisms to see the signs of unrest before it erupts, and to act decisively in response to this information. By contrast, the very means by which non-democracies insulate incumbents from competition sabotages their ability to understand and respond nimbly to changing circumstances….
The “modularity” of the modern citizen, stemming in no small part from the broad-based enrichment and access to technologies of coordination, creates a great deal of risk for regimes that outright ignore even very small interest groups. Genuinely open electoral competitions for government leadership with universal enfranchisement provides an institutional valve for the many interests and factions of a nation-state to exert influence, thereby discouraging extra-institutional measures. This is especially true of legislatures, which by their nature subdivide the electorate and thereby create representatives to negotiate on behalf of particular interests….
The myth of the dictator is of a man who is not held back by politics and is therefore able to act decisively on behalf of the public good. But… the termination of electoral competition does not mean the termination of constituents that must be appeased…. Barriers to electoral contestation in the institutional sphere and the barriers to public criticism in the information sphere come at a cost… leave[s] them flying blind to the level of their true support…. Non-democracies that tend to be more successful and long lasting… come quite close to the line of being liberal democracies, and simply take measures to make it very unlikely that current incumbents will have to leave office….
At the end of the day, if most non-democracies feel compelled to come as close to liberal democratic institutional arrangements as they can while still insulating incumbents from competition, and to characterize themselves as liberal democracies in their own official documents, one wonders what the case for dictatorship really is. Why settle for anything less than the real thing?
ONE VIDEO: Apple Computer: The Greatest:
ONE POEM: Programming Folkware:
Lou Ellen Davis: The Last Bug: ‘“But you're out of your mind,” they said with a shrug.
“The customer's happy; what's one little bug?”
But he was determined. The others went home.
He spread out the program, deserted, alone.
The cleaning men came. The whole room was cluttered
With memory-dumps, punch cards. “I'm close,” he muttered.
The mumbling got louder, simple deduction,
“I've got it, it's right, just change one instruction.”
It still wasn't perfect, as year followed year,
And strangers would comment, “Is that guy still here?”
He died at the console, of hunger and thirst.
Next day he was buried, face down, nine-edge first.
And the last bug in sight, an ant passing by,
Saluted his tombstone, and whispered, “Nice try.”
The poem was written in December of 1967: when IBM cards were fed into card readers face down, with the 9-edge first).
O þ Things Þt Went Whizzing by…
Very Briefly Noted:
David Yaffe-Bellany: How Sam Bankman-Fried’s Crypto Empire Collapsed… A masterclass from David Yaffe-Bellany of The New York Times on not to cover SBF.
Dan Froomkin (2021): Jackie Calmes has an assignment for failing political reporters: ‘Jackie Calmes, a veteran former New York Times White House reporter, lit up media Twitter over the weekend with a powerful and heartfelt plea to her former colleagues to abandon false equivalence when covering the two political parties… one of the asymmetries I see in my daily life is the Democratic politicians are somewhat scared of we democratic economists—genuinely want us to approve their policy proposals, and craft them with that in mind—call republican, politicians are confident their team economists will fall into line no matter what. The New York Times, as far as I can see, never tried to get into the equivalent ood equilibrium.
Economist: Has private equity avoided the asset-price crash?: ‘No, but everyone is enjoying the charade…
Matt Yglesias: Why hasn’t technology disrupted higher education already?: ‘The key question about AI and school is about the past…
Noah Smith: Techno-optimism for 2023: ‘What you should be excited about…. The A.I. breakout…. The energy revolution rolls onward…. The strange biotech boom…. There are others—falling launch costs… quantum computing… workable brain-computer interface implants…. No matter what happens to the total factor productivity numbers, I’ll have plenty of new material for these techno-optimism posts throughout the decade…
Robin Greenwood & Marco C. Sammon: The Disappearing Index Effect: ‘The abnormal return associated with a stock being added to the S&P 500 has fallen from an average of 3.4% in the 1980s and 7.6% in the 1990s to 0.8% over the past decade…
IBM: IBM Unveils 400 Qubit-Plus Quantum Processor and Next-Generation IBM Quantum System Two: ‘"The new 433 qubit 'Osprey' processor brings us a step closer to the point where quantum computers will be used to tackle previously unsolvable problems," said Dr. Darío Gil, Senior Vice President, IBM and Director of Research…
A complete inability to recognize on ProPublica’s part that its quality control has failed, and that its anxiety to be non-partisan made it easy play for Republican staff grifters. And, of course, an organization that cannot admit mistakes will soon have no quality control at all:
James Fallows: On That ProPublica ‘Chinese Lab Leak’ Story: ‘ProPublica and Vanity Fair co-released an investigative report…. It started with leads from a team of Republican staffers in the U.S. Senate.... The central figure in the story is a man named Toy Reid… [who] claims to have unique insight into the nuance and meaning of official Chinese documents.... Almost as soon as the story appeared, it was met with questions, criticism, and derision…. Skepticism about the story was entirely separate from views on the “lab leak” hypothesis itself.... The controversy involves language, evidence, and journalistic transparency and accountability… O’Kane: “Yes, exactly. I actually had been avoiding the ProPublica response, because I knew it was going to make me angry. And it has made me angry…
I need to figure out how to apply this to our current situation: I need to have a model of the natural rate of inflation at hand:
George A. Akerlof, William T. Dickens, & George L. Perry: The Macroeconomics of Low Inflation: ‘We question the standard version of the natural rate model…. Downward nominal wage rigidity in an economy in which individual firms experience stochastic shocks in the demand for their output…. There is no unique natural unemployment rate. Rather, the rate of unemployment that is consistent with steady inflation itself depends on the inflation rate. In the long run, a moderate steady rate of inflation permits maximum employment and output. Maintenance of zero inflation measurably increases the sustainable unemployment rate and correspondingly reduces the level of output. We show that these effects are large, not negligible as some previous studies have claimed…
Forgive the informality, but the medium seems to require it. I am very struck by your emphasis on the importance of the "Corporate Research Laboratory". My cursory understanding is that the great god 'Shareholder Returns' had pretty much killed these off by the 1990's. Some would argue that they were replaced by venture capital. It strikes me however, that this is not a one for one replacement, even if it is dollar for dollar. A corporate research laboratory has institutional memory. It looks for things that might be useful and develops those that appear promising. Venture capital by contrast invests in silos. This idea. This company. Make or break. It may well be more "efficient" from a financial perspective. I wonder however, if it is not much less likely to promote the broad productivity improvements that you write of.
P.S. This is still topical (long read):
AI and such. Missed it at the time.