On radicals and economists*

It will sound strange, but economists as a crowd are — just like the rest of us — human beings crushed by the existing social order.  Since their role as the secular priests of capitalism is to rationalize the status quo, then they are crushed twice.  Not that they will get much sympathy from us for it, but they are crushed by the social order and — on top of that — they are crushed by the crippling belief that markets embedded on a ground of social inequality constitute the best of all possible worlds.  Economists suffer the fate of a person who not only believes in gravity, but who also believes that his body is so heavy that, over time, he’ll suck himself inwards and turn into a black hole.  Needless to say, it will not be easy to persuade this fellow that gravity can be defied and that, with the assistance of certain props (e.g. an airplane), he could even fly.

Like the rest of us, the economists are full of… false consciousness.  It is worse in their case, because they are very actively and joyfully producing and reproducing all that… false consciousness.   But we know that false consciousness is not a bunch of illusions lodged in our heads for no particular reason, but illusions and confusions that the existing social order fosters, reinforces, and turns into a crusty objectified social reality — again, because it justifies the social order and thus helps to perpetuate it.  As these illusions and confusions harden as social objects, we cannot dispel them by simply changing our minds individually.  Instead, we need to uproot them through collective action, by overthrowing the social order and building a new one.

Needless to say, the emancipation of the economists will be the work of the economists themselves.  But given their peculiar — complicit, in fact — situation they will need much help from the rest of us.  More like tough love, but tough love is a form of help.  Yet, one may ask: Is that a good use of our conscious time (and what is a human being’s ultimate scarce resource, but the conscious part of our brief stay on earth)?  So, should we spend our dear short lives trying to help the economists liberate themselves?  Well, let us think like mainstream economists, i.e. selfishly.  What is in it for us, who radically reject the status quo as antithetical to the preservation and development of our humanity?

Personally, I have spent a serious chunk of my life studying the ideas, the mode of thinking, and the behavior of this strange sub-species, so you won’t be surprised with my answer:  Yes, I believe it is worth the time of at least some of us.  By way of an analogy, let me explain to you why there is much in it for us and what we can obtain as a result.

But, before I do that, I shall connect my remarks with other things discussed in this conference.  Yesterday, David Howell recited the famous Keynes’ quip about the imagination of politicians being trapped by the ideas of deceased “academic scribblers.”  We know that ideas become a material force when they grip the minds of people.  That the ideas of dead and living economists have become a material force is hardly controversial here.  Today, Chris Rude alluded to the significant role that economists play in the management of the state, central banks, international organizations, etc.  The analyses that back up the policy proposals under consideration by town councils, congresses, governments, and international organizations are invariably couched in the language of economic benefits and costs.  Large portions of the public itself channel the prejudices of dead economists.

Charles Darwin showed that all vegetable soil was poop from worms, i.e. that all vegetable soil had gone through the digestive system of worms at least once.  Similarly, all economic policies that we now see crystallized into hardened and oppressive social conditions, all economic policies that the powers-that-be implement, often with catastrophic consequences for the rest of us, are the intellectual poop defecated by a certain sub-species of human worms.

I am not saying this just to offend the worms gratuitously: without worms agriculture and the food on our tables would not be what they are.  No, I am saying it to reinforce David Howell’s point yesterday about the momentous importance, the consequential nature, the life-wrecking character that the ideas of economists have in the real world.

But saying bad things about the economists is not particularly controversial at a URPE meeting.  The next thing I will say may well be.  I’ll say that the ideas of the economists would not be as consequential, as practically important, in fact as harmful as they are, if they simply were a bunch of absurdities without connection to the society we live in.  No, the ideas of the economists — insofar as they have become a material force that shapes up or, more clearly, messes up our lives, have a certain connection to the society we live in.  Therefore, when we take a tabula rasa approach to rejecting economics, we sleight this connection at our own peril.

As an analogy to this, think of the production of weapons.  Military production is as constrained by the laws of physics, by technological possibilities, as the production of civil goods.  Therefore, to produce a modern drone or a piece of radioactive artillery, we need a certain mastery of physical laws, a measure of control over physical processes of incredible subtlety and complexity, just like we need them to produce a truck to carry wheat or a CAT scanner for medical uses.  In fact, because our social order is antagonistic, because social conflict is oozed by our social order, the development of means of destruction leads the development of means of production.  In terms of sheer innovation, the production of goods lags behind the production of bads.  To a not insignificant extent, civil production progresses by its late adoption of technologies originally developed for military purposes.

I am not saying anything novel here.  Radicals in the past have noticed this: In Grundrisse, Marx says that, in the history of capitalism, “war developed before peace”; not only that the productive forces of capitalism were an adaptation of destructive forces that had been developed first to meet the needs of war-making, to enable primitive capital accumulation, but that the very social structures that characterized capitalism had been tried and tested first in the organization of the military.  So, not only — Marx noted in Grundrisse — mechanization developed first in war-making before grabbing and revolutionizing “the interior of bourgeois society,” but so did wage labor.

To repeat: the development of the forces of production under capitalism is largely a byproduct of the development of the forces of destruction.  Now, socialists are not trying to develop the forces of production of civil goods from scratch.  We cannot go back in time and prevent what already happened.  Instead, what we are trying to do is appropriate, take over, and then refit or transform the human powers that now exist to meet our purposes, which are the purposes of building the most peaceful, cooperative, and free society we can possibly build.

I think you all see where I am going: The economists, especially those occupied with the development of theoretical economics, lead in the production of intellectual weaponry under the guise of social science.  However, the production of socially destructive ideas abides by the same epistemological laws that regulate the production of constructive ideas.  To be less cryptic, I shall refer to the mathematical language in which a large chunk of modern theoretical economics is now recast.  This is what I view as the most encompassing trend in the field with regards to its abstract theoretical structure.  To be clear: I am referring here not to economics as it appears to us in undergraduate textbooks, but theoretical economics as it is being developed at the cutting-edge, a work that percolates into applied or policy-oriented fields like macroeconomics (let alone textbooks) with a several-year delay.

In its latest reincarnation, these destructive ideas are being recast in the framework of measure theory, the mathematical theory of measure spaces and measurable sets.  Set theory, particularly the theory of convex sets, as well as real analysis (the analysis of relations among variables whose values are real numbers) and optimization, which used to be among the most general frameworks used by the economists a couple of generations ago (e.g. in the development of general equilibrium analysis and its derivations), have been completely absorbed as pieces within the broader mathematical framework of measure theory.

The study of stochastic processes, which underpins much of the empirical research in macroeconomics and finance economics, used to stand separate from — if not at odds with — abstract economic theory.  But as things have turned out, the mathematics of stochastic processes, which resulted from the development of axiomatic probability theory, is precisely measure theory.  In the language of measure theory, random variables (a generalization of the notion of a variable to account explicitly for the shifting limits of one’s cognition) are instances of measurable functions over a peculiar algebraic space, while probabilities are measures, i.e. a generalization of the intuitive geometric notion of length.

But, aside from probabilities, the concept of measure is so general — and the mathematical results established in the field are so intellectually potent — that virtually every conceivable notion in economics (e.g. space, time, quantities, prices, etc.) can be all elegantly subsumed under it.  With the help of measure theory, probability theory being — again — one of its special cases, the whole mathematical paraphernalia that economists use today has now been placed within this new, unified mega-framework.

This is another one of Hegel’s historical ironies.  Although the rudiments of measure theory began with the work of Borel and Lebesgue in early 20th century’s France, Soviet mathematicians elevated it to higher levels of rigor and generality.  (Let me remind you here that, originally, the soviets — like Occupy Wall Street today — were emergent, vibrant civic structures that plain workers and soldiers in political motion during the 1905 Russian revolution forged to collectively direct the course of history.)  Building on those rudiments, and on the work of Russian mathematicians (e.g. Andrei Markov), the Soviet academic Andrei Kolmogorov developed the modern axiomatic edifice of probability theory, on which he built his analysis of stochastic processes.  Kolmogorov himself, as well as Vladimir Smirnov and a bunch of lesser known Soviet mathematicians built a spectacular edifice that, paradoxically, by this Hegelian historical twist, got appropriated by, among others, Western economic theorists, who then used it in the development of modern finance and macroeconomics.

The development of financial derivatives (nothing but pieces in the structure of capitalist private ownership over the productive wealth of our global society), spanning gigantic markets in which trillions of dollars change hands in a given day, hinged on methods of asset valuation that would have been unthinkable without these mathematical developments.  Now, turn around and look at the catastrophic effects that the deployment of these (Warren Buffett dixit) “financial weapons of mass destruction” unleashed on us!

I could suggest here a few of the multiple ways in which, I believe, the apparatus of measure theory and critically re-engineered insights from modern economic theory could be redeployed to illuminate and confront challenges facing the historical construction of socialism.  But that is a topic better left for another conversation.

I shall close my remarks now by saying that, in my view, the ultimate task of radical economists is, well, the expropriation of the expropriators.  But just like a thief who steals a car does not as a result become a mechanical engineer, we cannot limit ourselves to a superficial understanding and uncritical adoption of the “models” and “tricks” of mainstream theoretical economics.  I am not advocating for any sort of facile eclecticism — that  would be not only useless, but in fact dangerous.  No.  Our work is much more challenging: We need to grasp and understand the material as we make it our own.  We need to engage it, digest it critically, discard the elements of ideological rationalization lodged in it, and refit whatever useful is left to serve our purposes.  We need a true critical synthesis guided by the need to overthrow the social order and replace it with a society where the development of each is premise of the development of all.  The synthesis will be a richer radical understanding of social life.  And we ourselves will emerge changed: a more formidable revolutionary force.

* Presentation at the membership meeting of URPE, October 2, 2011.

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4 Comments

  1. there is a very classic review in an essential math journal by a famous mathematician which basically showed one could pretty much embed all (or most—he didn’t cover general relativity in the review, but emphasized quantum theory and stat mech—including essentially stochastic processes) from around ’77 (known from the bible as the beginning of the end of the new age—sex p’s/vu) which pretty much went through measure theory approaches, though from an abstract algebra perspective — group theory (though lie theory from way back makes the connection).

    so, in some ways what you say here is not particularily new. alot of economists do seem to think its radical and original to think the world is flat (though i prefer the colloquial variant—‘the world is fat’ by uncle tom freed man).

    maybe one could free economics from the economists. but then who would do the work? eg CLR james ‘every cook a governor’ (eg romney or perry).

    there seems to be a precambrian type explosion of heterodox economics; let every flower bloom or is this just a new form of consumerist competition? maybe a conference in hawaii attended by the most expert authorities would resolve the issue. one could solicit funds at occupied wall street for the plane travel, hilton hotel, catered meals.

    there’s a flood of information; but i am sure some people still aim to do quants on wall street while others will do their own thing. ecology.

  2. It seems exceedingly strange to a mathematician that measure theory is the target of your ire. I don’t quite understand why you separate the development of measure theory into the Borel-Lebesgue era and the Kolmogorov/Soviet era when contemporaries never stopped in the West or among persons emigrating to the U.S. from Soviet territories: Fatou (French), Fubini (Italian), Caratheodory (Greek), Levy (French), Nikodym (Polish->U.S.), von Neumann (Hungarian->U.S.).

    I in no way mean to diminish the work of Kolmogorov, Khinchin, et al, as they were certainly very important, and utterly foundational to the sub-category of measure theory that probability has become to mathematicians. However, the distinction made in the article seems a little excessive, it’s not as if Western mathematicians stopped contributing to measure (or probability) theory or weren’t significantly involved, or that it’s particularly meaningful to frame it as a “Soviet” discipline.

    And, from a pure mathematical standpoint, measure theory is nothing but a useful language to yield results that will then cascade to models following Kolmogorov’s probability axioms. Mathematicians strive to put results into their most general forms, and the standard language of measure theory is a vehicle to this.

    And, apart from the history, the methods of pricing assets I suspect are much more due to poor assumptions that have nothing to do with measure theory: the lognormal returns and therefore geometric Brownian assumptions. There is nothing in measure theory to dictate these make any sense, they’re merely what seem to be poorly fit assumptions to what should be empirical questions.

    I would be interested to hear your ideas of the problems with the apparatus of measure theory and how measure theory proper and not just assumptions of probabilistic models in measure theoretic language is the source of any problems.

  3. Thank you so much, Ryan. This is a thought-provoking comment. Just to clarify, there’s no ire against measure theory. That wasn’t my intent. On the contrary. I was calling radical economists (who, I define, as those who take to heart the viewpoint of those at the bottom of the social pyramid) to re-appropriate math. Measure theory and the theory of stochastic processes were only two examples of the kind of instruments that theoretical economists use and radical thinkers must acquire — I believe — to move things forward.

    I stand corrected that Western mathematicians were not passively waiting for Soviet mathematicians to develop these instruments. Their contributions are substantial. As an excuse: I was just trying to bend the stick a bit in the unusual direction. In economics graduate programs today, very often the Western (and U.S.) figures are given a higher status than foreign ones. Off the top of my head, I can mention the downplaying, prevalent in Chicago and Minnesota, of Lev Pontryagin’s approach to dynamic optimization in favor of Richard Bellman’s. The methods are perfectly complementary, insofar as they don’t intersect. But I believe there’s an ideological purpose to this (namely, the negation of every tiny bit of real historical progress under the Soviets), which I see it necessary to expose. You are correct in suggesting that, at some point, one needs to get over this pitting-A-against-B game and stress the complementarity.

    Regarding the practical applications in asset pricing, I have a very general (and therefore abstract) understanding of these methods. Some of my classmates made careers in high finance, for good or ill. I’m an academic, and I have never had a chance to examine closely the models that the practitioners of high finance use. So I’m not sure I can criticize meaningfully their choice of assumptions. I suspect that restrictive assumptions are very often imposed by existing knowledge and computational resources, with the entailed cost. I understand that the development of computing power allows for “minimizing theory” (assumptions) and letting the data “speak.” But no matter how well a model is made to conform to historical data, it is observations from the past we’re talking about here. As Keynes and others argued, there are hardwired inherent limits to predicting *social* outcomes. No set of assumptions can get around them.

    If this is of interest to you, you may find my review of Paul Davidson’s book of some interest:

    http://bit.ly/Xr1XGS

    Thanks again for your thoughtful comments. And happy new year!

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