Wednesday, October 26, 2016

New structural economics

Does economic theory provide anything like a concrete set of reliable policies for creating sustained economic growth in a middle-income country? Some contemporary economists believe that it is possible to answer this question in the affirmative. However, I don't find this confidence justified.

One such economist is Justin Yifu Lin. Lin is a leading Chinese economist who served as chief economist to the World Bank in 2008-2012. So Lin has a deep level of knowledge of the experience of developing countries and their efforts to achieve sustained growth. He believes that the answer to the question posed above is "yes", and he lays out the central components of such a policy in a framework that he describes as the "new structural economics". His analysis is presented in New Structural Economics: A Framework for Rethinking Development and Policy. (The book is also available in PDF format from the World Bank directly; link.)

Lin's analysis is intended to be relevant for all low- and middle-income countries (e.g. Brazil, Nigeria, or Indonesia); but the primary application is China. So his question comes down to this: what steps does the Chinese state need to take to burst out of the "middle income trap" and bring per capita incomes in the country up to the level of high-income countries in the OECD?

So what are the core premises of Lin's analysis of sustainable economic growth? Two are most basic: the market should govern prices, and the state should make intelligent policies and investments that encourage the "right kind" of innovation in economic activity in the country. Here is an extended description of the core claims of the book:
Long-term sustainable and inclusive growth is the driving force for poverty reduction in developing countries, and for convergence with developed economies. The current global crisis, the most serious one since the Great Depression, calls for a rethinking of economic theories. It is therefore a good time for economists to reexamine development theories as well. This paper discusses the evolution of development thinking since the end of World War II and suggests a framework to enable developing countries to achieve sustainable growth, eliminate poverty, and narrow the income gap with the developed countries. The proposed framework, called a neoclassical approach to structure and change in the process of economic development, or new structural economics, is based on the following ideas:

First, an economy’s structure of factor endowments evolves from one level of development to another. Therefore, the industrial structure of a given economy will be different at different levels of development. Each industrial structure requires corresponding infrastructure (both tangible and intangible) to facilitate its operations and transactions.

Second, each level of economic development is a point along the continuum from a low-income agrarian economy to a high-income post-industrialized economy, not a dichotomy of two economic development levels (“poor” versus “rich” or “developing” versus “industrialized”). Industrial upgrading and infrastructure improvement targets in developing countries should not necessarily draw from those that exist in high-income countries.

Third, at each given level of development, the market is the basic mechanism for effective resource allocation. However, economic development as a dynamic process entails structural changes, involving industrial upgrading and corresponding improvements in “hard” (tangible) and “soft” (intangible) infrastructure at each level. Such upgrading and improvements require an inherent coordination, with large externalities to firms’ transaction costs and returns to capital investment. Thus, in addition to an effective market mechanism, the government should play an active role in facilitating structural changes. (14-15)
So a state needs to secure the conditions for well-functioning markets; and it needs to establish an industrial strategy that is guided by a careful empirical analysis of the country's comparative advantage in the global economic environment. In practice this seems to amount to the idea that the middle-income economy should identify the leading economies' declining industries and compete with those on the basis of labor costs and mid-level technology. Lin also emphasizes the important role of the state in making appropriate infrastructure investments to support the chosen industrial strategy. This is a "structural economic theory" because it is guided by the idea that a developing economy needs to incrementally achieve structural transformation from a given mix of agriculture, industry, and service to a successor mix, based on the resources held by the economy that give it advantage in a particular set of technologies and production techniques. Here is a representative statement:
Countries at different levels of development tend to have different economic structures due to differences in their endowments. Factor endowments for countries at the early levels of development are typically characterized by a relative scarcity of capital and relative abundance of labor or resources. Their production activities tend to be labor intensive or resource intensive (mostly in subsistence agriculture, animal husbandry, fishery, and the mining sector) and usually rely on conventional, mature technologies and produce “mature,” well-established products. Except for mining and plantations, their production has limited economies of scale. Their firm sizes are usually relatively small, with market transactions often informal, limited to local markets with familiar people. The hard and soft infrastructure required for facilitating that type of production and market transactions is limited and relatively simple and rudimentary. (22)
Some common development strategies fail to conform to these ideas. So, for example, import substitution is a bad basis for economic development, because it subverts the market and it distorts the investment strategies of the state and the private sector; it fails to guide the given economy on a path pursuing incremental comparative advantage (18).

What this analysis leaves out completely is the goal of economic development -- improving human wellbeing. Indeed, the word "wellbeing" does not even appear in the book. And certainly the perspective on development offered by Amartya Sen in his theory of capabilities and realizations is completely absent. This is unfortunate, because it means that the book fails to address the most important issue in development economics: what the fundamental good of economic development is, and how we can best approach that good. Sen's answer is that the fundamental good is to increase the wellbeing of the globe's total population; and he interprets that goal in terms of his idea of human flourishing. (Sen's theory of economic development is provided in many places, including Development as Freedom. Here is a recent statement by Sen, Stiglitz, and Fitoussi on why GDP and growth in GDP are inadequate ultimate measures of development success; Mismeasuring Our Lives: Why GDP Doesn't Add Up.) Sen's fundamental view is this: the most important goal that a state can have is to create policies that enhance the development of the human capabilities of its population. In particular, social resources should be deployed to enhance education, health, domicile, and personal security. In such an environment individuals can have the fullest satisfaction of their life goals; and they can be the most productive contributors to innovation and growth in their societies. Well-educated and healthy people are an essential component of economic success for a country. But significantly, Lin does not address these "quality of life" factors at all (another phrase that does not occur once in the book).

Even less does Lin's theory address the kinds of issues raised by "post-development" thinkers like Arturo Escobar in Encountering Development: The Making and Unmaking of the Third World. Escobar challenges some of the most basic assumptions of classical economic development theory, beginning with the idea that industry-lead structural transformation is the unique pathway to human flourishing in the less-developed world. Escobar's critique involves several ideas. First is the observation that economic development theory since 1945 has been Eurocentric and implicitly colonial, in that it depends upon exoticized representations of the industrialized North and the traditional agricultural South. Against this colonial representation of global development Escobar emphasizes the need for a more ethnographic and cultural understanding of development. Second, this Eurocentric view brings along with it some crucial distributive implications -- essentially, that the resources and labor of the developing world should continue to provide part of the surplus that supports the affluence of the North. Third, Escobar casts doubt on the value of development "experts" in the design of development strategies for poor countries in the South (46). Local knowledge is a crucial part of sound economic progress for countries like Nigeria, Brazil, or Indonesia; but the development profession seeks to replace local knowledge with expert opinion. So Escobar highlights local knowledge, the importance of culture, and the importance of self-determination in theory and policy as key ingredients of a sustainable plan for economic development in the countries of the post-colonial South.

Why do these alternative approaches to development theory matter? Why is the absence of a discussion of wellbeing, flourishing, or culture an important lacuna in New Structural Economics? Because it results in a view of economic development that lacks a compass. If we haven't given rigorous thought to what the goal of development is -- and Sen demonstrates that it is entirely possible to do that -- then we are guided only by a rote set of recommendations: increase productivity, increase efficiency, increase market penetration, increase per capita income. But the fact of substantial rise in economic inequalities through a growth process means that it is very possible that only a minority of citizens will be affected. And the fact that a typical family's income has risen by 50% may be less important than the availability of a nearby health clinic for their overall wellbeing. And both of these kinds of considerations seem to be relevant in the case of China. It is well documented that there has been a substantial increase in China's income (and wealth) inequalities in the past thirty years (link, link). And it is also reasonably clear that China's commitment to social security provisioning is far lower than that of OECD countries. So it is far from clear that China's recent history of growth has been proportionally successful in enhancing the quality of life and human flourishing of the mass of its population (link).

The unstated assumption is that countries that pursue these prescriptions -- "maintain efficient markets, adopt an industrial strategy that accurately tracks shifts in comparative advantage, support investment in appropriate infrastructure to reduce transaction costs" -- will have superior long-term growth in per capita income and will be better able to ensure enhancements in the quality of life of their citizens. But this is nothing more than naive confidence in "trickle-down" economics. It ignores completely the problem of the likelihood of rising economic inequalities, and it doesn't provide any detailed analysis of how quality of life and human flourishing are supposed to rise. Development economics without capabilities and wellbeing is inherently incomplete; worse, it is a bad guide to policy choices.

Tuesday, October 25, 2016

Rational choice institutionalism

Where do institutions come from? And what kinds of social forces are at work to stabilize them once they are up and running?  These are questions that historical institutionalists like Kathleen Thelen have considered in substantial depth (linklink, link). But the rational-choice paradigm has also offered some answers to these questions as well. The basic idea presented by the RCT paradigm is that institutions are the result of purposive agents coping with existential problems, forming alliances, and pursuing their interests in a rational way. James Coleman is one of the exponents of this approach in Foundations of Social Theory, where he treats institutions and norms as coordinated and mutually reinforcing patterns of individual behavior (link).

An actor-centered theory of institutions requires a substantial amount of boot-strapping: we need to have an account of how a set of rules and practices could have emerged from the purposive but often conflictual activities of individuals, and we need a similar account of how those rules are stabilized and enforced by individuals who have no inherent interest in the stability of the rules within which they act. Further, we need to take account of well-known conflicts between private and public benefits, short-term and long-term benefits, and intended and unintended benefits. Rational-choice theorists since Mancur Olson in The Logic of Collective Action: Public Goods and the Theory of Groups have made it clear that we cannot explain social outcomes on the basis of the collective benefits that they provide; rather, we need to show how those arrangements result from relatively myopic, relatively self-interested actors with bounded ability to foresee consequences.

Ken Shepsle is a leading advocate for a rational-choice theory of institutions within political science. He offers an exposition of his thinking in his contribution to The Oxford Handbook of Political Institutions (link). He distinguishes between institutions as exogenous and institutions as endogenous. The first conception takes the rules and practices of an institution as fixed and external to the individuals who operate within them, while the second looks at the rules and practices as being the net result of the intentions and actions of those individuals themselves. On the second view, it is open to the individuals within an activity to attempt to change the rules; and one set of rules will perhaps have better results for one set of interests than another. So the choice of rules in an activity is not a matter of indifference to the participants. (For example, untenured faculty might undertake a campaign to change the way the university evaluates teaching in the context of the tenure process, or to change the relative weights assigned to teaching and research.) Shepsle also distinguishes between structured and unstructured institutions -- a distinction that other authors characterize as "formal/informal". The distinction has to do with the degree to which the rules of the activity are codified and reinforced by strong external pressures. Shepsle encompasses various informal solutions to collective action problems under the rubric of unstructured institutions -- fluid solutions to a transient problem.

This description of institutions begins to frame the problem, but it doesn't go very far. In particular, it doesn't provide much insight into the dynamics of conflict over rule-setting among parties with different interests in a process. Other scholars have pushed the analysis further.

French sociologists Crozier and Friedberg address this problem in Actors and Systems: The Politics of Collective Action (1980 [1977]). Their premise is that actors within organizations have substantially more agency and freedom than they are generally afforded by orthodox organization theory, and we can best understand the workings and evolution of the organization as (partially) the result of the strategic actions of the participants (instead of understanding the conduct of the participants as a function of the rules of the organization). They look at institutions as solutions to collective action problems -- tasks or performances that allow attainment of a goal that is of interest to a broad public, but for which there are no antecedent private incentives for cooperation. Organized solutions to collective problems -- of which organizations are key examples -- do not emerge spontaneously; instead, "they consist of nothing other than solutions, always specific, that relatively autonomous actors have created, invented, established, with their particular resources and capacities, to solve these challenges for collective action" (15). And Crozier and Friedberg emphasize the inherent contingency of these particular solutions; there are always alternative solutions, neither better nor worse. This is a rational-choice analysis, though couched in sociological terms rather than economists' terms. (Here is a more extensive discussion of Crozier and Friedberg; link.)

Jack Knight brings conflict and power into the rational-choice analysis of the emergence of institutions in Institutions and Social Conflict.
I argue that the emphasis on collective benefits in theories of social institutions fails to capture crucial features of institutional development and change. I further argue that our explanations should invoke the distributional effects of such institutions and the conflict inherent in those effects. This requires an investigation of those factors that determine how these distributional conflicts are resolved. (13-14)
Institutions are not created to constrain groups or societies in an effort to avoid suboptimal outcomes but, rather, are the by-product of substantive conflicts over the distributions inherent in social outcomes. (40)
Knight believes that we need to have microfoundations for the ways in which institutions emerge and behave (14), and he seems those mechanisms in the workings of rational choices by the participants within the field of interaction within which the institution emerges.
Actors choose their strategies under various circumstances. In some situations individuals regard the rest of their environment, including the actions of others, as given. They calculate their optimal strategy within the constraints of fixed parameters.... But actors are often confronted by situations characterized by an interdependence between other actors and themselves.... Under these circumstances individuals must choose strategically by incorporating the expectations of the actions of others into their own decision making. (17)
This implies, in particular, that we should not expect socially optimal or efficient outcomes in the emergence of institutions; rather, we should expect institutions that differentially favor the interests of some groups and disfavor those of other groups -- even if the social total is lower than a more egalitarian arrangement.
I conclude that social efficiency cannot provide the substantive content of institutional rules. Rational self-interested actors will not be the initiators of such rules if they diminish their own utility. Therefore rational-choice explanations of social institutions based on gains in social efficiency fail as long as they are grounded in the intentions of social actors. (34)
Knight's work explicitly refutes the occasional Panglossian (or Smithian) assumptions sometimes associated with rational choice theory and micro-economics: the idea that individually rational action leads to a collectively efficient outcome (the invisible hand). This may be true in the context of certain kinds of markets; but it is not generally true in the social and political world. And Knight shows in detail how the assumption fails in the case of institutional emergence and ongoing workings.

Rational choice theory is one particular and specialized version of actor-centered social science (link). It differs from other approaches in the very narrow assumptions it makes about the actor's particular form of agency; it assumes narrow economic rationality rather than a broader conception of agency or practical rationality (link). What seems clear to me is that we need to take an actor-centered approach if we want to understand institutions -- either their emergence or their continuing functioning and change. So the approach taken by rational-choice theorists is ontologically correct. If RCT fails to provide an adequate analysis of institutions, it is because the underlying theory of agency is fundamentally unrealistic about human actors.

Wednesday, October 12, 2016

A new exposition of assemblage theory

Manuel DeLanda has been a prominent exponent of the theory of assemblage for English-speaking readers for at least ten years. His 2006 book A New Philosophy of Society: Assemblage Theory and Social Complexity has been discussed numerous times in this blog (link, link, link). DeLanda has now published a new treatment of the subject, Assemblage Theory. As I've pointed out in the earlier discussions, I find assemblage theory to be helpful for sociology and the philosophy of social science because it provides a very appropriate way of conceptualizing the heterogeneity of the social world. The book is well worth discussing.

To start, DeLanda insists that the French term "agencement" has greater semantic depth than its English translation, assemblage. "Assemblage" picks up one part of the meaning of agencement -- the product of putting together a set of heterogeneous parts -- but it loses altogether the implications of process and activity in the French term. He quotes a passage in which Deleuze and Parnet explain part of the meaning of assemblage (agencement) (1):
What is an assemblage? It is a multiplicity which is made up of many heterogeneous terms and which establishes liaisons, relations between them, across ages, sexes and reigns -- different natures. This, the assemblage's only unity is that of a co-functioning: it is a symbiosis, a 'sympathy'. It is never filiations which are important, but alliances, alloys; these are not successions, lines of descent, but contagions, epidemics, the wind. (Dialogues II, 69)
This passage from Deleuze and Parnet highlights the core idea of an assemblage bringing together heterogeneous pieces into a new whole. It also signals the important distinction for Deleuze between interiority and exteriority. DeLanda explicates this distinction as indicating the nature of the relations among the elements. "Interior" relations among things are essential, logical, or semantic; whereas exterior relations are contingent and non-essential. Identifying a pair as husband and wife is to identify an interior relation; identifying a pair as a female architect and a male night club bouncer is an exterior relation. This is what Deleuze and Parnet refer to when they refer to alliances, alloys, contagions, epidemics: conjunctions of otherwise independent things or processes.

Let's look at some of the high-level concepts that play an important role in DeLanda's exposition.


DeLanda makes the important ontological point that assemblages are individuals: historically unique persistent configurations. "Assemblages have a fully contingent historical identity, and each of them is therefore an individual entity: an individual person, an individual community, an individual organization, an individual city" (19).
All assemblages should be considered unique historical entities, singular in their individuality, not as particular members of a general category. But if this is so, then we should be able to specify the individuation process that gave birth to them. (6)
In other words, the whole [assemblage] is immanent, not transcendent. Communities or organizations are historically individuated entities, as much so as the persons that compose them.... It is not incoherent to speak of individual communities, individual organizations, individual cities, or individual countries. The term 'individual' has no preferential affinity for a particular scale (persons or organisms) but refers to any entity that  is historically unique. (13)
These passages make it clear that the idea of an individual is not restricted to one ontological level (biological human organism), but is rather available at all levels (individual, labor union, farmers' cooperative, city, corporation, army).


Several important meta-level distinctions about relations among components of an assemblage arise in DeLanda's exposition. The distinction between relational interiority and exteriority is familiar from his earlier exposition in New Philosophy. Interior relations are conceptual or intrinsic -- uncle to nephew. Exterior relations are contingent -- street vendor to policeman. A second distinction that DeLanda discusses is coded/decoded. This distinction too is developed extensively in New Philosophy. Relations that are substantially fixed by a code -- a grammar, a specific set of rules of behavior, a genetic program -- are said to be coded; relations that are substantially indeterminate and left to the choices of the participants are decoded. A third distinction that DeLanda discusses in Assemblage Theory is that between stratum and assemblage. An assemblage is a concrete particular consisting of heterogeneous parts; a stratum is a more or less uniform group of things (organisms, institutions).

Here is a passage from New Philosophy on the concept of coded relations:
[Organizations] do involve rules, such as those governing turn-taking. The more formal and rigid the rules, the more these social encounters may be said to be coded. But in some circumstances these rules may be weakened giving rise to assemblages in which the participants have more room to express their convictions and their own personal styles. (16)
And in Assemblage Theory:
The coding parameter is one of the knobs we must build into the concept [of assemblage], the other being territorialisation, a parameter measuring the degree to which the components of the assemblage have been subjected to a process of homogenisation, and the extent to which its defining boundaries have been delineated and made impermeable. (3)
(In a later post I will discuss DeLanda's effort to subsume each of these distinctions under the idea of a parameter or "knob" inflecting a particular concept of assemblage (city, linguistic practice). Also of interest there will be DeLanda's effort to understand the ontology of assemblage and stratum in analogy with the idea in physics of a phase space (gas, liquid, solid).)


DeLanda believes that assemblage theory depends on the idea of emergence for macro-level properties:
The very first step in this task is to devise a means to block micro-reductionism, a step usually achieved by the concept of emergent properties, the properties of a whole caused by the interactions between its parts. If a social whole has novel properties that emerge from interactions between people, its reduction to a mere aggregate of many rational decision-makers or many phenomenological experiences is effectively blocked. (9)
Notice that this is a weak conception of emergence; the emergent property is distinguished simply by the fact that it is not an aggregation of the properties of the individual components. This does not imply that the property is not derivable from a theory of the properties of the parts and the causal interactions among them. (Several earlier posts have raised questions about the validity of the idea of emergence; link.)

And in fact DeLanda shortly says some surprising things about emergence and the relations between higher-level and lower-level properties:
The property of density, and the capacity to store reputations and enforce norms, are non-reducible properties and capacities of the entire community, but neither involves thinking of it as a seamless totality in which the very personal identity of the members is created by their relations. (11)
Up to the level of national markets the main emergent property of these increasingly larger trading areas is synchronized price movements. Braudel uncovers evidence that average wholesale prices (determined mostly by demand and supply) move up and down in unison within urban regions, provinces, or entire countries. (15)
These are surprising claims as illustrations of emergence, because all of the properties mentioned here are in fact reducible to facts about the properties of individuals and their relations. Density is obviously so; we can derive density by measuring the number of individuals per unit of space. The capacity of a group to store reputations is also a direct consequence of individuals' ability to remember facts about other individuals and communicate their memories to others. The community's representation of "reputation" is nothing over and above this distributed set of beliefs and interactions. And the fact of synchronized price movements over an extended trading area likewise has perfectly visible microfoundations at the individual level: communications and transportation technologies permit traders to take advantage of momentary price differentials in different places, leading to a tendency for all accessible points within the region to reveal prices that are synchronized with each other (modulo the transportation costs that exist between points).

These observations lead me to suspect that the concept of emergence is not doing much real work here. The paraphrase that DeLanda offers as a summary conclusion is correct:
Thus, both 'the Market' and 'the State' can be eliminated from a realist ontology by a nested set of individual emergent wholes operating at different scales. (16)
But this observation does not imply or presuppose the idea of strong emergence.

It seems, then, that we could put aside the language of emergence and rest on the claim that assemblages at various levels have stable properties that can be investigated empirically and historically; there is no need for reduction to a more fundamental level. So assemblage theory is anti-reductionist and is eclectic with regard to the question of levels of the social world. We can formulate concepts of social entities at a wide range of levels and accommodate those concepts to the basic idea of assemblage, and there is no need for seeking out inter-level reductions. But likewise there is no need to insist on the obscure idea of strong emergence.

Assemblage theory and social realism

This treatment of social theory from the point of view of assemblage theory is distinctly friendly to the language of realism. DeLanda argues that assemblages are real, mind-independent, and ontologically stable. Assemblages are in the world and can be treated as independent individual things. Here is a representative statement:
The distinction between a concept and its cases also has an ontological aspect. The concept itself is a product of our minds and would not exist without them, but concrete assemblages must be considered to be fully independent of our minds. This statement must be qualified, because in the case of social assemblages like communities, organizations, and cities, the assemblages would cease to exist if our minds disappeared. So in this case we should say that social assemblages are independent of the content of our minds, that is, independent of the way in which communities, organizations, and cities are conceived. This is just another way of saying that assemblage theory operates within a realist ontology. (138)
The most important transcendent entity that we must confront and eliminate is the one postulated to explain the existence and endurance of autonomous entities: essences. (139)
Both points are crucial. DeLanda emphasizes that social entities (assemblages) are real items in the social world, with a temporally and causally persistent reality; and he denies that the ideas of "essence", "kind", or "inner nature" have a role in science. This is an anti-essentialist realism, and it is a highly appropriate basis for social ontology.


There is much more to discuss in DeLanda's current treatment of assemblage, and I expect to return to other issues in later posts. What I find particularly interesting about DeLanda's current book are the substantive observations DeLanda makes about various historical formations -- cities, governments, modes of production, capitalism. Assemblage theory is of real value for social scientists only if it provides a better vocabulary for describing social entities and causes. And DeLanda's illustrations make a persuasive case for this conclusion.

For example, in discussing Braudel on the difference between markets and capitalism he writes:
These are powerful words. But how can anyone dare to suggest that we must distinguish capitalism from the market economy? These two terms are, for both the left and the right, strictly synonymous. However, a close examination of the history of commercial, financial, and industrial organizations shows that there is indeed a crucial difference, and that ignoring it leads to a distortion of our historical explanations. (41)
This discussion has some significant parallels with the treatment of the modern economy offered by Dave Elder-Vass discussed earlier (link). And DeLanda's closing observation in chapter 1 is quite insightful:
Much of the academic left today has become prey to the double danger of politically targeting reified generalities (Power, Resistance, Capital, Labour) while at the same time abandoning realism. A new left may yet emerge from these ashes but only if it recovers its footing on a mind-independent reality and if it focuses its efforts at the right social scale, that is, if it leaves behind the dream of a Revolution that changes the entire system. This is where assemblage theory may one day make a real difference. (48)
More than the logical exposition of various esoteric concepts associated with assemblage, it is DeLanda's intelligent characterization of various concrete social and historical processes (for example, his extensive discussion of Braudel in chapter 1) that cements the intellectual importance of assemblage theory for historical and social scientific thinking.

Another important virtue of the treatment here is that DeLanda makes a strong case for a social ontology that is both anti-reductionist and anti-essentialist. Social things have properties that we don't need to attempt to reduce to properties of ensembles of components; but social things are not transcendent, essential wholes whose behavior is independent from the activities of the individuals and lower-level configurations of which they consist. Further, this view of social ontology has an important implication that DeLanda explicitly calls out: we need to recognize the fact of downward causation from social configurations (individual assemblages) to the actions of the individuals and lesser configurations of which they consist. A community embodying a set of norms about deference and respectful behavior in fact elicits these forms of behavior in the individuals who make up the community. This is so through the very ordinary fact that individuals monitor each others' behavior and sometimes retaliate when norms are breached. (This was the view of community social power developed several decades ago by Michael Taylor; Community, Anarchy and Liberty.)

Wednesday, October 5, 2016

What is "conceptual history"?

The post-war German historian Reinhart Koselleck made important contributions to the theory of history that are largely independent from the other sources of Continental philosophy of history mentioned elsewhere in this blog. (Koselleck’s contributions are ably discussed in Niklas Olsen's History in the Plural: An Introduction to the Work of Reinhart Koselleck (2012).) Koselleck contributed to a “conceptual and critical theory of history” (The Practice of Conceptual History: Timing History, Spacing Concepts (2002), Futures Past: On the Semantics of Historical Time (2004)). His major compendium of the history of concepts of history in the German-speaking world is one of the major expressions of this work (Otto Brunner, Werner Conze, and Reinhart Koselleck, Geschichtliche Grundbegriffe Bände 1 - 8).

Koselleck believes there are three key tasks for the metahistorian or philosopher: to identify the concepts that are either possible or necessary in characterizing history; to locate those concepts within the context of the social and political discourses and conflicts of the time period; and to critically evaluate various of these concepts for their usefulness in historical analysis.

Here is how Koselleck distinguishes between social history and conceptual history in The Practice of Conceptual History:
The claim to reduce all historical utterances concerning life and all changes in them to social conditions and to derive them from such conditions was asserted from the time of the Enlightenment philosophies of history up to Comte and the young Marx. Such claims were followed by histories that, methodologically speaking, employed a more positivistic approach: from histories of society and civilization, to the cultural and folk histories of the nineteenth century, up to regional histories that encompassed all aspects of life, from Moser to Gregorovius to Lamprecht, their synthetic achievement can aptly be called social-historical.
By contrast, since the eighteenth century there have also been deliberately thematized conceptual histories (Begriffigeschichten) -- the term apparently derives from Hegel -- which have retained a permanent place in histories of language and in historical lexicography. Of course, they were thematized by disciplines that proceeded in a historical-philological manner and needed to secure their sources via hermeneutic questioning. Any translation into one's own present implies a conceptual history; Rudolf Eucken has demonstrated its methodological inevitability in an exemplary fashion for the humanities and all the social sciences in his Geschichte der philosophischen Tenninologie. (21)
A large part of Koselleck’s work thus involves identifying and describing various levels of historical concepts. In order to represent history it is necessary to make use of a vocabulary that distinguishes the things we need to talk about; and historical concepts permit these identifications. This in turn requires both conceptual and historical treatment: how the concepts are understood, and how they have changed over time. In "The critical theory of history: Rethinking the philosophy of history in light of Koselleck's work" (link) Christophe Bouton encapsulates Koselleck’s approach in these terms: “[It is an] inquiry into the historical categories that are used in, or presupposed by, the experience of history at its different levels, as events, traces, and narratives” (164).

What this amounts to is the idea that history is the result of conceptualization of the past on the part of the people who tell it – professional historians, politicians, partisans, and ordinary citizens. (It is interesting to note that Koselleck’s research in the final years of his career focused on the meaning of public monuments.) It is therefore an important, even crucial, task to investigate the historical concepts that have been used to characterize the past. A key concept that was of interest to Koselleck was the idea of “modernity”. This approach might seem to fall within the larger field of intellectual history; but Koselleck and other exponents believe that the historical concepts in use actually play a role as well in the concrete historical developments that occur within a period.

A good example of this kind of historical-conceptual treatment is Koselleck's account of the history of the German concept of "bund" in Futures Past (87-88). "A history of the meanings of the word Bund is not adequate as a history of the problems of federal structure “conceptualized” in the course of Reich history. Semantic fields must be surveyed and the relation of Einung to Bund, of Bund to Bündnis, and of these terms to Union and Liga or to Allianz likewise investigated" (88).

Here is how Koselleck opens chapter 5 of  Futures Past, "Begriffsgeschichte and social history":
According to a well-known saying of Epictetus, it is not deeds that shock humanity, but the words describing them. Apart from the Stoic point that one should not allow oneself to be disturbed by words, the contrast between “pragmata” and “dogmata” has aspects other than those indicated by Epictetus’s moral dictum. It draws our attention to the autonomous power of words, without whose use human actions and passions could hardly be experienced, and certainly not made intelligible to others. This epigram stands in a long tradition concerned with the relation of word and thing, of the spiritual and the lived, of consciousness and being, of language and the world. Whoever takes up the relation of Begriffsgeschichte to social history is subject to the reverberations of this tradition. The domain of theoretical principles is quickly broached, and it is these principles which will here be subjected to an investigation from the point of view of current research.
The association of Begriffsgeschichte to social history appears at first sight to be loose, or at least difficult. For a Begriffsgeschichte concerns itself (primarily) with texts and words, while a social history employs texts merely as a means of deducing circumstances and movements that are not, in themselves, contained within the texts. Thus, for example, when social history investigates social formations or the construction of constitutional forms—the relations of groups, strata, and classes—it goes beyond the immediate context of action in seeking medium- or long-term structures and their change. Or it might introduce economic theorems for the purpose of scrutinizing individual events and the course of political action. Texts and their attributed conditions of emergence here possess only a referential nature. The methods of Begriffsgeschichte, in contrast, derive from the sphere of a philosophical history of terminology, historical philology, semasiology, and onomatology; the results of its work can be evaluated continually through the exegesis of texts, while at the same time, they are based on such exegesis. (75)
So Koselleck has in mind a methodology that focuses on the formal semantics of historical concepts -- what he refers to here as "the sphere of a philosophical history of terminology, historical philology".

It is worth noticing that history comes into Koselleck’s notion of Begriffsgeschichte in two ways. Koselleck is concerned to uncover the logic and semantics of the concepts that have been used to describe historical events and processes; and he is interested in the historical evolution of some of those concepts over time. (In this latter interest his definition of the question parallels that of the so-called Cambridge School of Quentin Skinner, John Dunn, and John Pocock.) More generally, Koselleck’s aim is to excavate the layers of meaning that have been associated with key historical concepts in different historical periods. (Whatmore and Young's A Companion to Intellectual History (2015) provide extensive and useful accounts of each of the positions mentioned here.)

Numerous observers emphasize the importance of political conflict in Koselleck’s account of historical concepts: concepts are used by partisans to define the field of battle (Pankakoski 2010). Here is a passage in Futures Past that makes this point clearly:
The semantic struggle for the definition of political or social position, defending or occupying these positions by deploying a given definition, is a struggle that belongs to all those times of crisis of which we have learned through written sources. Since the French Revolution, this struggle has become more acute and has undergone a structural shift; concepts no longer serve merely to define given states of affairs, but reach into the future. (80)
Conceptual history may appear to have a Kantian background – an exploration of the “categories” of thought on the basis of which alone history is intelligible. But this appears not to be Koselleck’s intention, and his approach is not apriori. Rather, he looks at historical concepts on a spectrum of abstraction, from relatively close to events (the French Revolution) to more abstract (revolutionary change). Moreover, he makes rigorous attempts to discover the meanings and uses of these concepts in their historical contexts.

Christophe Bouton also argues that Koselleck also brings a critical perspective to the concepts that he discusses: he asks the question of validity. To what extent do these particular concepts work well to characterize history?
More precisely, its methodology lays claim to an autonomous sphere which exists in a state of mutually engendered tension with social history. From the historiographic point of view, specialization in Begriffsgeschichte had no little influence on the posing of questions within social history. First, it began as a critique of a careless transfer to the past of modern, context-determined expressions of constitutional argument; and second, it directed itself to criticizing the practice in the history of ideas of treating ideas as constants, assuming different historical forms but of themselves fundamentally unchanging. (81)
Koselleck’s work defines a separate space within the field of the philosophy of history. It has to do with meanings in history, but it is neither teleological nor hermeneutic. It takes seriously the obligation of the historian excavate the historical facts with scrupulous rigor, but it is not empiricist or reductionist. It emphasizes the dependence of “history” on the conceptual resources of those who live history and those who tell history, but it is not post-modern or relativist. Koselleck provides an innovative and constructive way of formulating the problem of historical representation and knowledge.

Sunday, October 2, 2016

Guest post by Paul Draus and Juliette Roddy

Paul Draus and Juliette Roddy have been involved in street-level sociological research in Detroit for over ten years. Roddy is an economist and a member of the Sault Ste. Marie Tribe of Ojibwe Indians. She studies substance use, recovery and re-entry in the city of Detroit and teaches health policy and health economics in the Health and Human Services Department at the University of Michigan-Dearborn. Draus is professor of sociology at the University of Michigan-Dearborn. His research resides at the intersection of health and urban ethnography, and is especially focused on the life of marginalized populations in post-industrial cities. His research with Juliette Roddy, Mark Greenwald and other co-authors has integrated ethnographic and economic data to examine the everyday lives of Detroit heroin users, street sex workers, and other residents of forsaken neighborhoods. 

I invited Paul and Julie to provide a short example of their ethnographic work in Detroit for Understanding Society. Thanks, Paul and Julie!

Scraping Black Bottom: Linking Memory, Identity and Community in Detroit
Paul Draus and Juliette Roddy

We have been traipsing up and down Detroit streets for a number of years, in the course of carrying out various research projects and sometimes just out of curiosity. Like any other city, Detroit reveals more on foot than it does to the casual windshield or media-based observer. This being the Motor City, and the automobile being one of the main vehicles of both its early 20th-century prosperity and its late 20th-century deconstruction, it seems particularly appropriate to abandon one’s car in order to explore the remnants of the city left behind.

We use the word remnant rather than ruin deliberately, to counter the impression that Detroit is abandoned, empty or vacant, that it is simply a blank slate waiting to be rebuilt or reimagined by entrepreneurial newcomers or self-styled urban pioneers. While Detroit’s open spaces and ghostly buildings with their empty eyes do invite one’s imagination to wander, our on the ground encounters and interviews reveal a city that not only still lives, but struggles and asserts itself even more vigorously against the tide of withdrawn resources that has sucked its neighborhoods in a tightening spiral of disinvestment, neglect, escape and despair. These individuals express a powerful sense of pride in what Detroit has been, as well as a belief in its future potential, though tempered by that weary skepticism borne of hard experience and past disappointments.

Here we focus on one mobile interview, with a man we call “Mack,” a lifelong resident of the city’s once vibrant and now desolate-seeming East Side. Theoretically we draw upon the ideas of Deleuze, Guattari, and DeLanda, as well as the concepts of Yi-Fu Tuan, who wrote that, “Space and place are basic components of the lived world; we take them for granted. When we think about them, however, they may assume unexpected meanings and raise questions we have not thought to ask” (Space and Place: The Perspective of Experience, p. 3).  The form of this interview was a movement across the landscape, involving the three of us, and a digital recorder. As he led us on a walk through this territory that he knew intimately, we invited him to share whatever thoughts and observations came to mind, while occasionally asking questions to clarify what he said or understand what we were seeing.

This movement and these traces call to mind Deleuze and Guattari’s concept of a line of flight, illustrated in A Thousand Plateaus with the image of a wolf life, which appears as nothing more than a set of tracks across a field of snow. The line of flight represents a departure from regularity, a kind of disruption of fixed status, like a deer leaping over a fence, which contains possibility but also implies a return to regularity.

The line of flight is closely connected to the concept of the rhizome, which is described by Deleuze and Guattari using spatial terminology, “Unlike the graphic arts, drawing or photography, unlike tracings, the rhizome pertains to a map that must be produced, constructed, a map that is always detachable, connectable, reversible, modifiable, and has multiple entranceways and exits and its own lines of flight" (Deleuze and Guattari, A Thousand Plateaus: Capitalism and Schizophrenia, 1987, p. 21).

We can’t claim to understand all of D-G’s thought, which is somewhat elliptical and enigmatic by design (1,000 plateaus representing non-hierarchical levels of thought, a multiplicity, in direct contrast to traditional concepts of structure as a set of nested layers or arguments building toward a single thesis), but we also can’t help seeing the connection between the Wolf Line and the traces we see in Detroit’s shifting landscape. D-G write:
Bulbs and tubers are rhizomes… Even some animals are, in their pack form. Rats are rhizomes. Burrows are too, in all of their functions of shelter, supply, movement, evasion and breakout.
In this sense a neighborhood is also a clearly a rhizome, not a unitary, static reality, but a multiplicity of paths, trajectories, histories, structures, and potentials. Consider for example the following two images, one representing the stability of residence on the East Side, the other its transience:

Interviewee: Now, I wanted to take a picture of that. This where the Polacks stay at. 
Interviewer: Is there somebody stayin’ there now?
Interviewee: He been—yeah! Yeah. The Polack. Uh, he owned this building, and he owned this. You know? I mean, he owned this house and this right here.

Interviewer: Do you know him? 
Interviewee: Huh? I’m aware of him.
For Mack, the continued presence of “The Polack” is a reminder of the neighborhood’s persistence.  Even though his actual connection to him is tenuous, it retains an importance. It is something to be recorded with a photograph.

It is harder to take a picture of what has been materially and socially lost. A related photograph below was taken across the street from the house pictured above, but one struggles to place it.  The fragmented sidewalk gives an indication that this is a residential area, and the presence of the invasive species phragmites australis in the foreground provides an indication of a high water table, but aside from the hands of the speaker in the lower right hander corner of the photograph there are few clues as to the social character of this space.  Mack comments on this active absence, which is not a nothingness, a non-thing, but more like a memory, a ghost or a wound.

Interviewee: When you see all the empty fields out here like that, that’s why we—they called it—they called it black bottom, but it ain’t no such thing as a black bottom. Black bottom to us is like a poor neighborhood, because empty fields are empty fields. You know? Nobody—ain’t no stores out here. You have to go a mile away to go to a store, a grocery store. Ain’t no good foods out here. You got little small stores, get some hot dogs or canned foods. Somethin’ like that. Now, I’m only take you— 
Interviewer: So who calls, uh—you said, uh, people call this area black bottom? 
Interviewee: They call the whole black—um, the whole neighborhood black bottom now.

Interviewer: Okay. 
Interviewee: Because it a poor neighborhood.
Through his narration of these adjoining spaces Mack is tracing the neighborhood’s trajectory from a Polish-dominated enclave of homes and businesses to a majority-Black community, now dominated as much by the plant population as the current human residents.  Here we see a home surrounded by green growth, facing a field where the evidence of past density may be difficult to see.  For Mack, the empty lot contains within it the past human occupants as well as the plants now flourishing there.

Another lot contained what might be an unremarkable monument—a single concrete planter.  However, this object’s persistence rendered it worthy of remark.

Interviewee: Now, while we walkin’ and when you see things, now, this right here was Chuck house right here. See that? This right here was—yep. A black man owned this, but his momma had died and things that happened. And I see that his momma sick, got the stone. And you can look. You can look. When we partied here in the ‘80s—and this right here. I don’t know why, and I wasn’t nothin’ but four years old, and this still standin’ here, and I’m 54. Right here?
Interviewer: Yeah.
Interviewee: Still standin'.
Interviewer: Wow. 
Interviewee: Still standin’. Right here. Still—old though, but it still standin’. This right here was in the ‘80s. This was—it’s so old. It’s like, uh. It’s like, boom. It’s still standing. Nobody ain’t take it.
According to Tuan, “A neighborhood is at first a confusion of images to the new resident; it is blurred space, ‘out there.’ Learning to know the neighborhood requires the identification of significant localities, such as street corners and architectural landmarks, within the neighborhood space…” (Tuan 1977, Space and Place: The Perspective of Experience, p. 17).

This passage reveals the constant tension between permanence and transience, between blurred space and significant localities, or using the D-G terms, between territorialization and de-territorialization. As Mack has noted, this single inconspicuous icon is significant simply because “Boom! It’s still there.” 

Detroit’s fascination as a city lies not in its ruin, or reconstruction, but in the degree of play that exists between these ever-present potentialities, the struggles over identity and interpretation within these shifting fields, and the perhaps fruitless search for tipping points, clues to its ultimate outcome or meaning. Thus Detroit itself may be seen as a line of flight, unsettling because it seems so continually unsettled, a disruption of expectation, like the pheasant taking flight before our meandering feet. 

In that sense, Detroit is not so different from any other city, always becoming, yet constrained by the path lain by its past, distinctive only in degree.

Photo by Tomek Zerek, taken while stomping through Detroit fields with first author

(Can you see the pheasant?)

(For more on the Deleuzian perspective, see Manuel Delanda, A New Philosophy of Society: Assemblage Theory and Social Complexity.)

Saturday, September 24, 2016

New Directions in the Philosophy of Social Science

I am very happy to say that my new book appeared this week, New Directions in the Philosophy of Social Science. Thanks to all the people at Rowman & Littlefield who helped bring it to completion, including especially my editor Sarah Campbell. I hope that the book will be of interest to readers of Understanding Society, in that it is my effort to put into book form many of the ideas and themes that have come in for discussion in the blog over the past several years.

Here is a free sample of the book:

Sample of New Directions

Here is how I describe the genesis of the book:
This book is one of the fruits of an experiment in philosophical writing that I began in 2007. I created Understanding Society as an online venue where I would be able to do a different kind of academic writing. It was to be a “blog”; but, more accurately, it was a venue for “open-source philosophy” where I could formulate my thinking about a series of ideas and topics about the social sciences and the nature of society without attempting to regiment my thoughts into a sequential argument consisting of “chapters” and “books.” I described the work from the start as a “web-based, dynamic monograph on the philosophy of social science,” and it has lived up to this description better than I ever could have hoped. To use a different point of reference, the blog became my laboratory notebook, representing the findings and progress of my thinking about a number of topics about the nature of society and social knowledge.
Here is the table of contents:
A Better Social Ontology
Actor-centered Sociology
Social Things
Reduction and Emergence
Generativity and Complexity
Social Causation
Social Realism
Key themes include the value of an actor-centered approach to sociology; the unavoidable features of plasticity and heterogeneity of the social world; the sources of stability in higher-level social things; the relationships between levels or strata of the social world; the nature of social causation; and the appeal of scientific realism in the social sciences.

A discussion forum

I would like to continue the social interconnectedness of this work with the international group of readers and scholars who have visited Understanding Society over the years by inviting you to contribute to an ongoing discussion and commentary on topics raised in the book. To that end I've created a new page specifically designed for discussion of topics and issues raised in the book. Please visit here and provide your comments, thoughts, reactions, or criticisms. This site is located at

Monday, September 19, 2016

Measuring happiness internationally

One reasonable way of thinking about the most fundamental goal of international economic development is to increase the level of human happiness in all countries, and to reduce the degree of inequality of happiness within and across countries. But, as Aristotle asked several millennia ago, what is happiness? And how can we measure it, either in a given individual or in a population? Utilitarians and economists chose to avoid the problem of measuring subjective happiness, and the associated problem of comparing utilities across persons, by substituting preference satisfaction for subjective happiness. And worries about the challenges of measuring subjective happiness led philosophers like John Rawls and economists like Amartya Sen to prefer to focus on the objective prerequisites of life satisfaction -- primary goods, in the case of Rawls, and capabilities and functionings, in the case of Sen.

And yet the idea of happiness, or life satisfaction, is too important to dispense with. New efforts have been made to develop survey tools and methods that permit assessment of the average level of life satisfaction for groups of people in different countries. Among others Jeffrey Sachs has played a lead role in conceptualizing and furthering this project. The result is a series of World Happiness Reports, beginning in 2012 (link), which can be seen as a counterpart to the World Development Reports (link) and the Human Development Reports (link). Here are some orienting thoughts from Jeffrey Sachs's introductory essay in the 2012 report.
Most people agree that societies should foster the happiness of their citizens. The U.S. Founding Fathers recognized the inalienable right to the pursuit of happiness. British philosophers talked about the greatest good for the greatest number. Bhutan has famously adopted the goal of Gross National Happiness (GNH) rather than Gross National Product. China champions a harmonious society.

Yet most people probably believe that happiness is in the eye of the beholder, an individual’s choice, some- thing to be pursued individually rather than as a matter of national policy. Happiness seems far too subjective, too vague, to serve as a touchstone for a nation’s goals, much less its policy content. That indeed has been the traditional view. Yet the evidence is changing this view rapidly.

A generation of studies by psychologists, economists, pollsters, sociologists, and others has shown that happiness, though indeed a subjective experience, can be objectively measured, assessed, correlated with observable brain functions, and related to the characteristics of an individual and the society. Asking people whether they are happy, or satisfied with their lives, offers important information about the society. It can signal underlying crises or hidden strengths. It can suggest the need for change.

Such is the idea of the emerging scientific study of happiness, whether of individuals and the choices they make, or of entire societies and the reports of the citizenry regarding life satisfaction. The chapters ahead summarize the fascinating and emerging story of these studies. They report on the two broad measurements of happiness: the ups and downs of daily emotions, and an individual’s overall evaluation of life. The former is sometimes called “affective happiness,” and the latter “evaluative happiness.” (6)
Sachs reports that the research team preparing the ground for a World Happiness Report finds that life satisfaction is affected by a number of intangibles -- for example, "community trust, mental and physical health, and the quality of governance and rule of law" (7). The contributors emphasize that GNP per capita is a component, but not the most important component, of variations in life satisfaction across countries and regions.

What has always been challenging in prior discussions of promoting happiness is the problem of measurement. How do we assess an individual's level of happiness or satisfaction? And how do we assess the level of these goods for a population or group? The second large task, once the measurement problem has been addressed, is to uncover the social factors that account for variations in satisfaction and happiness levels. This problem is a more familiar one, since it can be treated using epidemiological and statistical tools to identify the factors most strongly correlated with positive or negative variations in satisfaction levels.

The World Happiness project relies on value-survey instruments to measure population life satisfaction. Existing surveys include the Gallup World Poll, the World Values Survey, and the European Social Survey and European Values Survey. The primary instrument used in the 2012 report is the Gallup World Poll (GWP). GWP uses a 0-10 scale and asks adults to place their current quality of life on this scale (the Cantril ladder).
In the Gallup World Poll respondents are asked (using fresh annual samples of 1,000 respondents aged 15 or over in each of more than 150 countries) to evaluate the quality of their lives on an 11-point ladder scale running from 0 to 10, with the bottom rung of the ladder (0) being the worst possible life for them and 10 being the best possible. (11) 
Here are distributions across the Cantril Ladder for the world and for several regions:

As the researchers recognize, there is a serious question here of how to calibrate and interpret the responses offered by thousands of Brazilians, Finns, and Thais for this question. What justifies us in thinking that a respondents' ratings of 5 in Brazil and Thailand mean that Brazilians and Thais are about equally happy? Similarly, what justifies us in thinking that a 0 ("worst possible life I can imagine") means the same in the two countries? Hypothetically, if a Brazilian can imagine a quality of life that includes arbitrary incarceration and torture, whereas a Canadian cannot, doesn't this imply that the Canadian's score of 5 reflects a higher level of absolute life satisfaction than the Brazilian? Intuitively it seems that possibilities like these (cultural or circumstantial differences in worst and best life circumstances in different countries) imply that cross-national comparisons of satisfaction levels based on this kind of survey are suspect.

Here is an OECD research report that directly addresses some of the issues raised by the life satisfaction survey methodology; link. This report focuses on several methodological issues, including this comment on the effects introduced by alternative question wording:
In contrast, Helliwell [one of the authors of the 2012 report] and Putnam (2004) examined the determinants of responses to both a global happiness and a life satisfaction question in a very large international data set (N > 83 500), drawn from the World Values Survey, the US Benchmark Survey and a comparable Canadian survey. They found that, although the main pattern of results did not differ greatly between the two measures, the life satisfaction question showed a stronger relationship with a variety of social indicators (e.g. trust, unemployment) than did the happiness question. However, in this work happiness was measured on a four-point scale and life satisfaction was measured on a ten-point scale; it is thus not clear that question wording, rather than scale length, produced this difference. (70)
Helliwell and Wang respond to this concern about question wording in the report:
The bottom line of our comparisons among life evaluations is that when life satisfaction, happiness and ladder questions are asked about life as a whole, they tell very similar stories about the likely sources of a good life. The information base for these comparisons is still growing, however, so there may be some systematic differences that appear in larger samples. (15)
Helliwell and Wang also address the questions of reliability (consistency across measurements of the same variable at different times) and validity (accurate correspondence to the unobservable variable under scrutiny). Their strongest case for the validity of these survey-based attempts at measurement of satisfaction is the fact that it is possible to demonstrate that variations in life satisfaction measures are largely correlated with a small number of factors that are plausibly relevant to the creation of life satisfaction.
As will be shown in the next chapter, more than three-quarters of the cross-country differences in national average measures of happiness can be explained by variables already known through experimental and other evidence to be important. (17)
Perhaps more credible than international comparisons are within-country comparisons of satisfaction levels. We might feel more confident in thinking that Canadians share a conceptual space of worst and best outcomes with each other, and this shared framework means that their assessments of their personal situations along the Cantrel ladder will be comparable. But even here, it seems likely that there are cultural and circumstantial differences within a country that might lead to the same kinds of inconsistencies. Are Brazilian favela dwellers likely to identify the same worst and best outcomes as residents of the elite neighborhood of Botafogo? Helliwell and Wang make a brief reply to this kind of concern (19), but more needs to be said.

Beyond measurement is causal explanation of differences across sub-groups. In Chapter 3 Richard Layard, Andrew Clark, and Claudia Senik attempt to tease out the material and circumstantial factors that account for variation in levels of life satisfaction across groups and countries. The factors that they identify include (59):
  • income
  • work
  • community and governance (trust, equality, freedom, bonding, ...)
  • values and religion
  • mental health
  • physical health
  • family experience
  • education
  • gender and age
They find that these factors serve to explain a substantial amount of the variation in life satisfaction in different groups. Here is a sample regression table based on data from three different surveys.

And here is their effort to recast most of these factors in a comparative analysis, estimating the effect of a given factor as a multiple of a 30% increase in income.

The largest positive effect identified here on life satisfaction is an increase in social support; whereas the largest negative effects are becoming unemployed and becoming separated in a marriage.

This approach to economic development assessment seems important for the outcomes it wants to be able to measure and assess. It is certainly true that average income is a poor measure (to say the least) of the wellbeing of a population. So it is worth exploring other approaches that attempt to get at wellbeing in a more direct way. It remains to be seen, however, whether survey research based on questions about levels of happiness or life satisfaction can do the job. There are certainly interesting statistics coming out of this research pertaining to the level of importance of various factors in causing a higher or lower level of reported satisfaction in a group. But whether the conceptual problems of interpretation mentioned above can be solved is still uncertain. This comes down to the familiar question of validity of the measurement instrument; but in order to assess validity, we need to have better answers to the original question -- what is life satisfaction? And can it be defined in a way that makes sense across persons or groups?

Thursday, September 15, 2016

Guest post by Dave Elder-Vass

[Dave Elder-Vass accepted my invitation to write a response to my discussion of his recent book, Profit and Gift in the Digital Economy (link). Elder-Vass is Reader in sociology at Loughborough University and author as well of The Causal Power of Social Structures: Emergence, Structure and Agency and The Reality of Social Construction, discussed here and here. Dave has emerged as a leading voice in the philosophy of social science, especially in the context of continuing developments in the theory of critical realism. Thanks, Dave!]

We need to move on from existing theories of the economy
Dave Elder-Vass

Let me begin by thanking Dan Little for his very perceptive review of my book Profit and Gift in the Digital Economy. As he rightly says, it’s more ambitious than the title might suggest, proposing that we should see our economy not simply as a capitalist market system but as a collection of “many distinct but interconnected practices”. Neither the traditional economist’s focus on firms in markets nor the Marxist political economist’s focus on exploitation of wage labour by capital is a viable way of understanding the real economy, and the book takes some steps towards an alternative view.

Both of those perspectives have come to narrow our view of the economy in multiple dimensions. Our very concept of the economy has been derived from the tradition that began as political economy with Ricardo and Smith then divided into the Marxist and neoclassical traditions (of course there are also others, but they are less influential). Although these conflict radically in some respects they also share some problematic assumptions, and in particular the assumption that the contemporary economy is essentially a capitalist market economy, characterised by the production of commodities for sale by businesses employing labour and capital. As Gibson-Graham argued brilliantly in their book The End Of Capitalism (As We Knew It): A Feminist Critique of Political Economy, ideas seep into the ways in which we frame the world, and when the dominant ideas and the main challengers agree on a particular framing of the world it is particularly difficult for us to think outside of the resulting box. In this case, the consequence is that even critics find it difficult to avoid thinking of the economy in market-saturated terms.

The most striking problem that results from this (and one that Gibson-Graham also identified) is that we come to think that only this form of economy is really viable in our present circumstances. Alternatives are pie in the sky, utopian fantasies, which could never work, and so we must be content with some version of capitalism – until we become so disillusioned that we call for its complete overthrow, and assume that some vague label for a better system can be made real and worthwhile by whoever leads the charge on the Bastille. But we need not go down either of these paths once we recognise that the dominant discourses are wrong about the economy we already have.

To see that, we need to start defining the economy in functional terms: economic practices are those that produce and transfer things that people need, whether or not they are bought and sold. As soon as we do that, it becomes apparent that we are surrounded by non-market economic practices already. The book highlights digital gifts – all those web pages that we load without payment, Wikipedia’s free encyclopaedia pages, and open source software, for example. But in some respects these pale into insignificance next to the household and family economy, in which we constantly produce things for each other and transfer them without payment. Charities, volunteering and in many jurisdictions the donation of blood and organs are other examples.

If we are already surrounded by such practices, and if they are proliferating in the most dynamic new areas of our economy, the idea that they are unworkably utopian becomes rather ridiculous. We can then start to ask questions about what forms of organising are more desirable ethically. Here the dominant traditions are equally warped. Each has a standard argument that is trotted out at every opportunity to answer ethical questions, but in reality both standard arguments operate as means of suppressing ethical discussions about economic questions. And both are derived from an extraordinarily narrow theory of how the economy works.

For the mainstream tradition, there is one central mechanism in the economy: price equilibration in the markets, a process in which prices rise and fall to bring demand and supply into balance. If we add on an enormous list of tenuous assumptions (which economists generally admit are unjustified, and then continue to use anyway), this leads to the theory of Pareto optimality of market outcomes: the argument that if we used some other system for allocating economic benefits some people would necessarily be worse off. This in turn becomes the central justification for leaving allocation to the market (and eliminating ‘interference’ with the market).

There are many reasons why this argument is flawed. Let me mention just one. If even one market is not perfectly competitive, but instead is dominated by a monopolist or partial monopolist, then even by the standards of economists a market system does not deliver Pareto optimality, and an alternative system might be more efficient. And in practice capitalists constantly strive to create monopolies, and frequently succeed! Even the Financial Times recognises this: in today’s issue (Sep 15 2016) Philip Stevens argues, “Once in a while capitalism has to be rescued from the depredations of, well, capitalists. Unconstrained, enterprise curdles into monopoly, innovation into rent-seeking. Today’s swashbuckling “disrupters” set up tomorrow’s cosy cartels. Capitalism works when someone enforces competition; and successful capitalists do not much like competition”.

So the argument for Pareto optimality of real market systems is patently false, but it continues to be trotted out constantly. It is presented as if it provides an ethical justification for the market economy, but its real function is to suppress discussion of economic ethics: if the market is inherently good for everyone then, it seems, we don’t need to worry about the ethics of who gets what any more.

The Marxist tradition likewise sees one central mechanism in the economy: the extraction of surplus from wage labour by capitalists. Their analysis of this mechanism depends on the labour theory of value, which is no more tenable that mainstream theories of Pareto optimality (for reasons I discuss in the book). Marxists consistently argue as if any such extraction is ethically reprehensible. Marx himself never provides an ethical justification for such a view. On the contrary, he claims that this is a scientific argument and disowns any ethical intent. Yet it functions in just the same way as the argument for Pareto optimality: instead of encouraging ethical debate about who should get what in the economy, Marxists reduce economic ethics to the single question of the need to prevent exploitation (narrowly conceived) of productive workers.

We need to sweep away both of these apologetics, and recognise that questions of who gets what are ethical issues that are fundamental to justice, legitimacy, and political progress in contemporary societies. And that they are questions that don’t have easy ‘one argument fits all’ answers. To make progress on them we will have to make arguments about what people need and deserve that recognise the complexity of their social situations. But it doesn’t take a great deal of ethical sophistication to recognise that the 1% have too much when many in the lower deciles are seriously impoverished, and that the forms of impoverishment extend well beyond underpaying for productive labour.

I’m afraid that I have written much more than I intended to, and still said very little about the steps I’ve taken in the book towards a more open and plausible way of theorising how the economy works. I hope that I’ve at least added some more depth to the reasons Dan picked out for attempting that task.