Third Person and First Person Economics

The particular reading that was most interesting to me from this set was Neuromancer by William Gibson. Neuromancer is a futuristic dystopia, a work of fiction, and while certainly thought-provoking, it is interesting to answer the question as to why it is economics. This question, when addressed in view of the Marxian readings, can be rephrased: Why all the confusion about what economic ideas really are?

The dichotomy at work in economics is highly reflective of a conflict every human being faces: when to think vs. when to act. Thinking about a problem inevitably removes you from it to some degree or another, but the results can be very positive if some deeper insight is revealed by the period of reflection. Acting on a problem places you in the middle of the problem, risking that your actions may only exacerbate it, but also giving your solution a chance to actually bring about a positive change. How do we balance these forces in our own lives? Quite often we pick an area of "expertise" in which we believe we can passively absorb a sufficient amount of information to justify our stepping into the fray ourselves. The more thoughtful approach is to tightly connect reflection and action in our daily lives. After all, reflection is an action too with some cost of time attached, and the best ideas are those born of the greatest real-world feedback. Speeding the two-way feedback cycle between one's thoughts and one's actions is really a noble ideal to pursue when it's practical to do so. In extreme cases of course, one cannot stop to reflect with every step - one just has to trust their instincts and take the action that seems the most accurate at the time. With this caveat in mind, it becomes clear why ethical and social thought is so multi-dimensional, even fractal, because many self-similar feedback loops are operating in our lives simultaneously. At the highest level of ethical abstraction, we may be in the middle of questioning our religious faith, or we may be rock solid in our belief system. This on and off pattern of thinking and action trickles down to the very simplest action - typing on a keyboard - an action for which I don't have any regret at the moment, but perhaps if I get hungry or my fingers sore I'll quickly reconsider. I could question everything all at once, but that would be almost immediately depressing - uncertainty isn't fun, but neither is absolute certainty - so I tie many of my questions to the feedback I receive from my actions, and ultimately a rather "modular" equilibrium of thought tends to keep me satisfied.

This is an important idea to swallow to understand how I see economic thought. Economics is a manner of thinking that is immediately descriptive and influential. At least something that I do today I'll do (perhaps indirectly) because I believe that free markets are generally an enlightened tool for letting people self-organize, optimize, and generally be pretty happy. If I didn't believe that at all, then I'd no doubt be rather disenchanted with almost everything going on around me. This was of course the way Marx viewed the world he inhabited. Since he had prophesied that free markets would essentially exhaust themselves into communism, he found no enjoyment out of the prospect of newly discovered resources in Australia. He would no doubt be annoyed that capitalists are launching into space (e.g. - Virgin Galactic, Ansari X prize, etc...) and have designs on the abundant mining resources of the moon and Mars. Once Marx's model of the economy was fixed in his mind, he supported the forces that fit into the model and was disturbed by anything that seemed to contradict it.

This is third-person economics, and anyone making models of behavior, or making forecasts with the hope of being correct is engaging in it. It is essentially an attempt to make a contribution to the 'big picture' of economics - to the all-encompassing belief systems that can dictate subsidiary beliefs. Left unquestioned for too long, these belief systems will not flexibly adapt to reality and can suddenly face wholesale decline. These top-down views of the world succeed in proportion to their willingness to adapt. With Catholicism we had Vatican II, and with mathematical economics we have the seemingly endless flexibility of adding new variables into our models. It's nearly a matter of energy conservation though, that we have these third-person beliefs. Claiming that it's "simply the way the world works" is often a handy way to get around the accusation that you're doing nothing to change it. If every individual wanted to change the world at the same time, there would certainly be some unnecessary conflict, so in the long run it really does make good sense for us all to select a handful of 'big picture' vantage points - even if they are only approximations.

William Gibson on the other hand, who was also clearly disturbed by some of the economic and technological trends he was observing in the 80s, decided to think about it in an entirely different way. The argument that Neuromancer is economic almost inevitably includes the observation that its thematic elements and dystopian foreshadowing influences the economic agents who read it. The book is built around the idea that the economy of the 80s could shape a world of tomorrow that nobody would want to live in. This is not a model. Nothing about Neuromancer suggests an effort to model anything. Gibson was holding up a mirror; structuring his book to cleverly convey a warning about what we're doing to ourselves out of faith in our economic belief system. Perhaps mathematical economists would hesitate to call Neuromancer "economics" because they could explain away Gibson's paranoia and its corresponding niche market of readers with some sort of variable. Maybe the success of Gibson's book simply meant that the Pna factor was increasing slightly, and econometricians would rush to say that this new factor is correlated with changes in the technology level A. Treating Gibson's work as something that can be quantified and predicted by a larger and more comprehensive framework is fundamentally unfair, because, as the title of this blog suggests, these same econometricians would have to somehow deal with the impact of their own ideas on the economy. One quickly imagines a mathematical economist trapped into an endless loop of modeling the reasons for his own occupation, and after soon realizing that his conclusions had helped influence a new economic reality, set about on a further iteration of self-examination (ad nauseum, to be sure).

So let's imagine for a moment that Gibson had been a die-hard third-person economist, making elaborate models, and arriving at predictions about where economic forces were conspiring to take us. Useful work insofar as it leads this hypothetical Gibson to a conclusion that he has very high statistical confidence in: the world will almost certainly evolve into the world described in Neuromancer. Now, the economist Gibson does something very strange indeed. Unlike other economists, who might go testify in front of Congress, or publish papers in scholarly journals, Gibson devises a method for influencing the future economy: write a science fiction novel and publish it for all to read. Bring the warning to the people who most need to hear it.

This is of course not who William Gibson was or what he did - he was a science fiction novelist from the start and not a classically trained economist. But the point remains that even if he had been a classically trained economist it could been an entirely rational decision for him to eschew traditional avenues of economic influence and go straight to the people and urge them to reconsider the path his economic models seem to indicate they've set out upon. If you want economic thought to really matter, you have to come up with economic thoughts that have the power to change minds and influence those who comprise the economic system you observe. In Hard Times Charles Dickens cleverly pulls the reader into a world dominated by stringent "Fact" and the coldest definition of rationality. Neuromancer reads like a comic book or action movie.

This is first-person economics. This is the economics of influence, where ideas are essentially measured by their practical appeal to a large audience. The novelist Ayn Rand, whose libertarian ideal was the centerpiece of her fiction novel Atlas Shrugged, explained in The New Intellectual that, "In a certain sense, every novelist is a philosopher, because one cannot present a picture of human existence without a philosophical framework; the novelist’s only choice is whether that framework is present in his story explicitly or implicitly, whether he is aware of it or not, whether he holds his philosophical convictions consciously or subconsciously." No matter what you may think of Rand's beliefs, this point is very sensible. It is a good justification for including novels about economic trends or issues in the catalogue of economic thinking, because all schools of economic thought "present a picture of human existence."

Lastly, this ties back in with my "modular" equilibrium discussion above by considering what happens when one reads a novel. By empathizing with the characters represented one is always considering what they might do in a similar position. Connecting your daily feedback process with a fictional character's is far more likely to convince someone to actually change specific behaviors. Large third-person economic models can have an enormous impact, as Marx and the neoclassical economists have clearly shown, but the nature of the impact is top down. One can subscribe to third-person economics and feel reassured that private property is a good or bad idea, but one must more deeply contemplate first-person economics and consider what it means for daily lifestyle choices.