My Commentary on þe Beginning of “Slouching Towards Utopia”, & BRIEFLY NOTED
In retrospect, I needed a different first paragraph to start off Slouching Towards Utopia <bit.ly/3pP3Krk>. Too many people have been disappointed that the book is actually not much about industrial..
CONDITION: Semester Start wiþ a Bang!
We are going to start with a history-of-economic-thought event! <https://n2pe.berkeley.edu/events/blessed-be-the-market/>:
FIRST: Þe Beginning of My Slouching Towards Utopia, wiþ My Commentary:
In retrospect, I needed a paragraph before this to start off Slouching Towards Utopia <bit.ly/3pP3Krk>. Too many people have been disappointed that the book is actually not much about the industrial research lab and the modern corporation, but rather about the consequences of the changes and transformations they midwifed. (It is very much about globalization.):
What I call the “long twentieth century” started with the watershed-boundary crossing events of around 1870—the triple emergence of globalization, the industrial research lab, and the modern corporation—which ushered in changes that began to pull the world out of the dire poverty that had been humanity’s lot for the previous ten thousand years. What I call the “long twentieth century” ended in 2010, with the world’s leading economic edge, the countries of the North Atlantic, still reeling from the Great Recession that had begun in 2008, and thereafter unable to resume economic growth at anything near the average pace that had been the rule since 1870. The years following 2010 were to bring large system-destabilizing waves of political and cultural anger from masses of citizens, all upset in different ways and for different reasons at the failure of the system of the twentieth century to work for them as they thought that it should.
In between 1870 and 2010, things were marvelous and terrible, but by the standards of all of the rest of human history much more marvelous than terrible.
There we have my first claim about the history of the long 20th century: that, both compared to all past centuries and on an absolute scale, the history of the long 20th century was indeed, as Eric Hobsbawm says, the history of an Age of Extremes—but those extremes were much much much more marvelous than terrible. The arc of long 20th-century history was, by and large and broadly, with many hesitations, backward slippages, and complications, toward not justice but at least toward hope, hope for someday a truly human world.
The one-hundred and forty years 1870-2010 of the long twentieth century were, I strongly believe, the most consequential years of all humanity’s centuries.
Here is my second claim: that the long 20th century was the most consequential century in humanity’s history, ever. Why? Because back in 1870 humanity was still desperately poor. Now some of us are very rich—the upper-middle classes of the global north are rich beyond the most fabulous dreams of luxury dreamed by previous ages. And most of us are, by the standards of all previous centuries, very comfortable and long-lived indeed. And that all of us are not so is a great scandal.
And it was the first century in which the most important historical thread was what anyone would call the economic one, for it was the century that saw us end our near-universal dire material poverty.
Here is my third claim: That in the long 20th century, for the very first time in human history, the principal axis of history was economic—rather than cultural, ideological, religious, political, military-imperial, or what have you. Why was the long 20th century the first such century in which history was predominantly economic? Because before 1870 the economy was changing only slowly, too slowly for people's lives at the end of a century to be that materially different from how they had been at the beginning. So the economy was thus the painted-scene backdrop behind the stage, rather than the action on the stage. (Now do note that you can still say that the principal axis of any millennium's history is economic, for over millennia things do change.)
But back up: what I have said here simply establishes that the principal axis of the history of the long 20th century could have been economic—that the economy was changing and that enough economic damn things were happening one after the other to make it a player in history. But was it a lead actor? One of the major themes of my book is going to be: Yes, it was the lead actor.
My strong belief that history should focus on the long twentieth century stands in contrast to what others—most notably the Marxist British historian Eric Hobsbawm—have focused on and called the ‘short twentieth century’, which lasted from the start of World War I in 1914 to the fall of the Soviet Union in 1991.
This is a minor digression: My Grand Narrative of the 20th century is not the only Grand Narrative one could construct. We have to have some Grand Narrative, some single most-important plot thread—if we don't, we almost cannot think at all, for we really have almost no way to think other than in narrative. I think mine is the most important. But others disagree. And it is important never to forget that every Grand Narrative allows and enables you to see some things—hopefully the most important things to you—very clearly indeed, but blocks your vision of other things.
Such others tend to see the nineteenth century as the long rise of democracy and capitalism, from 1776 to 1914, and the short twentieth century as one in which really-existing socialism and fascism shake the world.
In fact, I believe that, in the western academy, the predominant major Grand Narrative, at least implicitly, of the 20th century is that it was really-existing socialism vs. fascism, and really-existing socialism knocking itself out in the process of winning its victory, leaving consumer capitalism—“that old bitch gone in the teeth”, as the other great post-WWII British Marxist historian E.P. Thompson calls it <https://marxists.org/archive/thompson-ep/1973/kolakowski.htm…>, as the unworthy victor in the struggle over systems of political-economic organization.
Needless to say, I do not take this view.
I see the three-part mid-century struggle between the systems as, not a sideshow, but as something taking place outside of the center ring.
Histories of centuries, long or short, are by definition grand narrative histories, built to tell the author’s desired story.
You cannot write a history of an entire century without committing yourself to some Grand Narrative—without a spearpoint you cannot conduct a successful hunt, and without a central thread for them to follow, humans, who think in narratives, cannot grasp and remember your story. Thus the necessity of the spearpoint. It will be imperfect and "false". But it is necessary and essential. You have to hold both the necessity and the imperfectness in your mind simultaneously, always, as you read and think. The map is not the territory. The map, however, is the map. Your history will then stand or fall based on how well you back that narrative.
Setting these years, 1914–1991, apart as a century makes it easy for Hobsbawm to tell the story he wants to tell.
Hobsbawm’s choice of period was calculated to provide heavy weight for the spearshaft behind the spearpoint of the particular Grand Narrative he wished to tell. Indeed, if you start and end on Hobsbawm’s dates—1917 and 1990—it is very hard not to wind up telling some version of his story. It may well not have the valence he gives it: of World Communism as the tragic and doomed hero of the century, defeating fascism but being so poisoned by the circumstances of its development and struggle that it then expires after a long decline, leaving its unworthy rival consumer capitalism in control, and thus closing off humanity's road to utopia. The 1917-1990 short 20th century can be told with Frank Fukuyama's "end of history" valence instead. But, as I said, while that is certainly a story, I do not think it is THE story that people 500 or 1000 years from now will .think is important and tell when they tell the story of the years on both sides of 1950.
But it does so at the price of missing much of what I strongly believe is the bigger, more important story.
I really don’t think either really-existing socialism or fascism is, in the long run of human destiny, worthy of being a protagonist (or an antagonist) in big-think broad-sweep history. I mean: really-existing socialism was a dead end, a false path, a horrible warning in terms of political-economic systems. And as for fascism... well... if it turns out that future historians want to tell political history not as a whig progressive but rather as an Aristotelian alternation-and-decay-and-replacement-of-régimes story, then fascism will have its place as a form of tyranny in the age of mass and social media, much as Thoukydides discusses the role of Peisistratos and his supposed championing of the cause of the hyperakrioi—with the exception that Peisistratos did actually have policies to boost the prosperity of the hyperakrioi, and did make Athens great. But if we do better than Aristotelian alternation in political régimes in the long run, fascism and its cousins will also be seen as dead ends, horrible warnings, stories that we tell to remind us how horrible people can be to one another, rather than the protagonist of some Grand Narrative principal thread of human history.
The bigger, more important story is the one that runs from about 1870 to 2010, from humanity’s circa-1870 success in unlocking the gate that had kept it in dire poverty, up to its circa-2010 failure to maintain the pace of the rapid upward trajectory in human wealth that the earlier success had set in motion.
I think that is the worthy story of the history of the 20th century has as its protagonist neither really-existing socialism, nor really the “free world” that triumphed over the totalitarianisms. I think that the worthy story is, rather, humanity’s escape from Malthusian poverty—and from societies in which the class of people with leisure to think deeply and nutrition to think about something other .than how hungry they are is small, and is composed of those who have figured out how to unproductively take an outsized share by force and fraud. This escape from the realm of material necessity into the realm of freedom, choice, and options is, I think, the proper story—and the big story. And its proper protagonist is humanity.
And if you haven’t bought the book, I have now gotten enough favorable feedback from non-friends to be able to very confidently say: you really should but it—and I am not just saying that because I am the author. <bit.ly/3pP3Krk>.
MUST-READ: The Entrepreneurial State:
No answers, but lots of good questions:
Caleb Whatney: But Seriously, How Do We Make an Entrepreneurial State?: ‘How to Make an Entrepreneurial State: Why Innovation Needs Bureaucracy
by Rainer Kattel, Wolfgang Drechsler, and Erkki Karo… Building on… Mariana Mazzucato... a fiery defense of the essential role the public sector will need to play in supporting innovation…. But without a clear plan for improving state capacity, such efforts often prove to be wasteful and ineffective.... How to Make an Entrepreneurial State gets mired in high-level abstractions and historical case studies, and ultimately neglects practical questions. A better title for the book might be “Why to Make an Entrepreneurial State”—the “How” is scarcely to be found…. Advanced Research Projects Agency, the Japanese Ministry of International Trade and Industry, and the Swedish innovation agency Vinnova… certain themes… repeat… the need for flexible hiring rules, the importance of attracting a nation’s best and brightest into public service, and the significance of overarching “missions”....
So, how does one actually make an entrepreneurial state? There is no single correct model, and in fact, an essential element of entrepreneurship is the ability to correct course and revise plans in real time…. Nimble new agencies are started to meet new challenges… but eventually solidify into a “normal”… structure.... We need to think carefully about the bureaucratic incentives to experiment. And by “experiment”… I mean the scientific sense of experiment… design, data collection, and evaluation…. One of the ongoing public reckonings relevant to the present discussion is why, exactly, the Centers for Disease Control and Prevention (CDC) failed so extensively at controlling and preventing disease…. At nearly every turn, the CDC slow-walked the response and avoided taking proactive steps…. Rochelle Walensky has acknowledged as much and specifically cited the tendency of the agency to act like an academic institution rather than an emergency responder…. This is a startling contrast with the origins of the CDC in the 1940s as a quasi arm of the U.S. military…. The truth is that we don’t really know how to make an entrepreneurial state. There’s no single template that can be applied uniformly to rescue us from bureaucratic complacency. But the nature of entrepreneurship is to go out there and try new things...
ONE IMAGE: Þe House Right Now Has Zero Members:
ONE VIDEO: Sun Microsystems:
Very Briefly Noted:
Marty Weitzman: Prices vs. Quantities… The best comparative systems paper ever written, IMHO.
Martin Sandbu: When wage inflation is good for you… As I say, repeatedly, we need a theory of the natural rate of inflation if we are to do macro properly at all. We do not have one.
Marcelo Rinesi: Þis by Noah Smith May Well Be Better þan Anything I Read in All 2022, & BRIEFLY NOTED: ‘The near-future of AI in science IMHO looks more like this: https://arxiv.org/abs/2212.13254 Using ML to augment existing knowledge in areas so complex that all the data we have ever had is probably not enough to even get a good handle on things without a lot of previous theory… yes. I have been told that Chat-GPT3 has been trained on half the words on the Internet, and there are not that many more words. That implies that this particular lemon has already been nearly squeezed..
Matt Yglesias: American transit agencies should prioritize ridership over other goals: ‘It's the only way to get costs under control…. Wasting money is really, really easy when nobody is specifically telling you not to. It’s no secret that the California High-Speed Rail Authority is not prioritizing cost-effectiveness; they openly brag about their emphasis on other goals, like small business participation and the creation of good-paying jobs… A very good plea for tuning our bureaucratic organization's so that they each have a mission to do one good thing, and only one good thing.
David Glasner: My Paper “Robert Lucas and the Pretense of Science” Is now Available on SSRN <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4260708>… Cutting-edge fashionable macro theory, since the start of my career still seems to me like a nightmare, from which we are unsuccessfully, struggling to awake.
Richard Henderson: Five Things You Need to Know to Start Your Day: ‘Fed Frustration: Federal Reserve officials last month affirmed their resolve… cautioned against underestimating their will to keep interest rates high…. The tone of the minutes of… Dec. 13-14 gathering suggested frustration that this was undermining the central bank’s efforts to bring price pressures under control… This plus the next four are powerful straws in the wind that the biggest macroeconomic risk right now is that the Federal Reserve over does it, and winds us back in a possibly deep recession and secular stagnation.
Colby Smith: US inflation has not ‘turned the corner yet’: ‘Gita Gopinath, deputy managing director of the IMF, said there is a ‘very narrow path’ for the US to avoid a recession this year…. It is too early for the Federal Reserve to declare victory…. Gita Gopinath… urged the US central bank to press ahead with rate rises this year despite a recent moderation in headline inflation…
Kristine Aquino: Fed resolve: ‘The Fed underlined its determination to stamp out inflation in the minutes released yesterday for the December meeting of the FOMC. Officials noted that a "misperception" of the Fed's reaction function would complicate the bank's goal of restoring price stability…
Kristine Aquino: Disappearing jobs: ‘While official data still seem to indicate a strong US jobs market… anecdotal evidence suggests a pocket of weakness in tech. Amazon is laying off more than 18,000 employees — the biggest reduction in its history. And Salesforce will cut about 10% of its workforce because it said it hired too many people during the pandemic…
Chris Anstey: The Great Escape: ‘With central banks around the world still engaged in the most aggressive monetary tightening drive in decades, now wouldn’t seem to be an ideal moment to publish a book titled “Fiscal Policy Under Low Rates.” Nevertheless… Olivier Blanchard says his work… embodies an eminently relevant framework for policymakers going forward. For one thing, he thinks the era of relatively low interest rates isn’t over...
Dan Gillmor: Journalists (And Others) Should Leave Twitter. Here’s How They Can Get Started: ‘Journalists — among many information providers and users — should move to decentralized systems where they have control of what they say and how they distribute it. And philanthropic organizations have a major role to play. Here is a way forward… Vote-with-your-feet for a better public sphere!
Zvi Mowshowitz: Covid 1/5/23: Various XBB Takes: ‘People doing their Obligatory Thread on Latest Variant, in this case XBB. All reach broadly compatible conclusions…. 1. XBB is taking over. 2. XBB is no more or less dangerous than previous variants. 3. It will however extend the winter wave longer than it would have lasted… Get yourself boosted and re-boosted, people!
One way to understand the Neoliberal Turn is that social democracy’s focus on equality and on the welfare rights of citizens ran into the buzzsaw of Aristotle's principle that justice requires treating equals equally, but unequals unequally. And that the “unequals” here are those who are perceived as not trying to hold up their end of the social contract. This remains an enormous problem—especially when a majority or a near-majority judges, that those whose skin is a different color or who speak with a different accent, or ipso facto, not holding up their end of the social contract:
Sam Freedman: The Changing Politics of Aspiration + Fairness: ‘I’m interested in… particular changes in how voters see key concepts like “aspiration” and “fairness”. Back in the 90s it was a new approach to these ideas that underpinned the transformation of… Labou…. Phillip Gould… Tony Blair and Peter Mandelson… focus on the aspirational working and lower middle classes, a consequence of Gould’s own early life growing up in Woking. He was enormously frustrated by the inability of Labour in the 80s and early 90s to speak to these voters and their entirely reasonable desire for a better life, a higher wage, a new car, or a refitted kitchen. The Tories did seem able to offer this, whether by allowing people to own their council flat, offering shares in newly privatised companies that could be sold on for profit, or through tax cuts. All of this came at the price of higher inequality, which was why Labour fought it all so hard. But they discovered that seeking to defend the most vulnerable groups wasn’t enough, by itself, to win an election.
The left-wing conception of fairness as equality, Gould argued, simply didn’t fit with the electorate’s model: “The view was growing that those who worked hard and behaved responsibly were not being fairly rewarded, while others made gains they did not deserve, had not worked for, were not entitled to…. When people are asked what fairness means they invariably answer by one form or another of the same formulation: stop people abusing the system, give people who work hard a fair deal.”… Blair was the son of an aspirational Tory, for him it wasn’t just strategy or triangulation, it was an essential part of his political identity. For Starmer and most of the current shadow cabinet it feels a bit more strained because they were brought up believing more in the traditional Labour model of fairness…. In 1992 Gould, Blair and Brown tried to imbue Labour with a more aspirational message but Kinnock and Smith couldn’t make it stick, and never really got it, at least not in such a visceral way. Some commentators think the same could still happen to Starmer…
Ah! Wow! Very interesting!
Porlock: Comment on Twitter on Fire!, & BRIEFLY NOTED: ‘In re: J M Keynes: “The 20th century transformation of the word ‘economy’ to mean not household (or public) stewardship of resources, but rather frugality…” Ahem. In Marlowe's Faust, Dr Faustus says, “Bid Onkaymeon [sp?] farewell”, referring the Greek “On kai me on”, meaning “being and not being”: the kind of thing that philosophers have worried over from the earliest times. An early edition (the first, I think) corrected this to the simple and understandable and wrong “Bid Economy farewell”. Or so I have read. I pondered this for a time till I realized that Economy here meant Frugality, to which Faustus could bid farewell now that he had Mephistopheles working for him. Hence, not just a 20th century corruption. [All of this subject to correction by those who know literary history better than I]…
Ah. I had not realized that Jefferson’s Manual is what is controlling us now:
Matt Tait: The House has No Members and the Bootstrapping of Power: ‘If there’s no Representatives from the previous Congress, and there’s not (yet) any sworn-in Representatives from the new Congress, then by what authority is anyone in that chamber even electing a Speaker in the first place? That’s a great question… a fun question to work through…. Bootstrapping authorities and power-transfer ceremonies are fascinating to me…. The oath being a hard requirement for transitioning from a Representative-elect to a full member comes directly from Article IV…. Not only does the House have no members; it has no Rules either…. What happens when the House has no Rules? The answer is we look first to the Constitution itself, and then to general parliamentary law, as described in the applicable provisions of Jefferson's Manual…. Jefferson’s Manual is actually a fantastic example in its own right of America’s constitution that don’t sit in the main body of the Constitution itself, in a way that Britain embraces and America likes to pretend isn’t the case…. These rules… provide for the Clerk of the House to Chair debate in the chamber until a Speaker is selected; for debate to occur at all; and for certain motions (such as a motion to adjourn) to be passed; for the yays and nays to be counted; and for basically everything else to fall to a ruling by the Chair which can be appealed…
I confess I do not see where the 2026 earnings expectations of $9.00 a share are coming from:
Andrew Dickson: OK, 2022 was a disaster for Tesla. What next?: It’s all about fundamentals: ‘Fundamentals were exceptional over the past few years…. Sellside… in early 2020 projected that the company’s earnings-per-share three years out (in 2023) would be about $1.80… $28 a share… an out-year P/E of… 16. Today, 2026 expectations are $8.82, and the stock is… $110…. A fivefold increase in the fundamental expectations of the firm, and nearly a fourfold increase in the share price. Sure, yes, when the stock flirted with $400 last year, thing were a bit nutty—but is it that crazy today?… Sellside analysts anticipate 25 per cent EPS growth…. If you… love $TSLA, then model it out and buy it; and if you end up overshooting, then sell it…. You may have views about… wild card[s in]… the valuation of Tesla. But the main driver will probably remain the automotive business. In the meantime, every stock… is a sell at some price, and everything is a buy at some price too. That isn’t Drew Dickson speaking, it’s Ben Graham…
Trend lines for existing institutions are more likely than not to slowly head south: entropy rules, offset by innovation and entrepreurial institution-building. That said, U.S. higher education is still by far the best in the world: slow decline is still very damned good:
Dan Drezner: Is Higher Education Headed in the Wrong Direction?: Thoughts on a Tyler Cowen column: ‘The past few years have been hard in the ivory tower. The growing bureaucratization… has been a cognitive drag. In order to appease every university directive, my course syllabi are beginning to resemble the terms-of-service agreements that folks never read…. DEI… well-intentioned… institutionalized… to make it seem more… an exercise in performativity…. The erosion of trust in expertise, the polarization of public attitudes, and the rise of a plutocratic class that believes in disruption über alles—are still there…. If anything, Cowen misses a few issues, like explicit state efforts to censor university instruction, the decline in international students affecting the bottom line of universities, and the adjunctification of higher education…. That said... I am unconvinced by Cowen’s claim that the grass is greener somewhere else…. [And] the optimist in me is not persuaded that the trendlines will continue to go south…. What do you think?…
My copy of the OED sites for economy:
4. Careful management of resources, so as to make them go as far as possible.
a. with reference to money and material wealth : Frugality, thrift, saving. Sometimes euphemistically for Parsimony, niggardliness.
1670 Cotton Espernon 1. 11. 62 Men have ... been very liberal in their censure of the Duke's Oeconomy. a 1674 CLARENDON Hist. Reb. x. (1704) III. 88 Nor was this Oeconomy well liked even in France. [...]
etc etc etc.
Admittedly, my edition is rather dated now. But surely they have not retracted so many references.
Sandbu: We are supposed to HAVE a Leijunhufvud based theory of the natural of inflation (the rate that maximizes real income subject to expected shocks requiring changes in relative prices when some prices cannot adjust downward). The Fed supposedly estimated it at 2% PCE, but recognized that extraordinarily large shocks -- COVID/Putin -- require a FAIT. Now it just needs to figure out ho to set policy instrument values at levels to achieve its target.