Deirdre McCloskey en estat pur

 Beyond Positivism, Behaviorism, and Neoinstitutionalism in Economics

Índex del darrer llibre de Deirdre McCloskey on deixa ben retratats molts economistes:

Introduction The Argument in Brief

Part I. Economics Is in Scientific Trouble

Chapter 1. An Antique, Unethical, and Badly Measured Behaviorism Doesn’t Yield Good Economic Science or Good Politics

Chapter 2. Economics Needs to Get Serious about Measuring the Economy

Chapter 3. The Number of Unmeasured “Imperfections” Is Embarrassingly Long

Chapter 4. Historical Economics Can Measure Them, Showing Them to Be Small

Chapter 5. The Worst of Orthodox Positivism Lacks Ethics and Measurement

Part II. Neoinstitutionalism Shares in the Troubles

Chapter 6. Even the Best of Neoinstitutionalism Lacks Measurement

Chapter 7. And “Culture,” or Mistaken History, Will Not Repair It

Chapter 8. That Is, Neoinstitutionalism, Like the Rest of Behavioral Positivism, Fails as History and as Economics

Chapter 9. As It Fails in Logic and in Philosophy

Chapter 10. Neoinstitutionalism, in Short, Is Not a Scientific Success

Part III. Humanomics Can Save the Science

Chapter 11. But It’s Been Hard for Positivists to Understand Humanomics

Chapter 12. Yet We Can Get a Humanomics

Chapter 13. And Although We Can’t Save Private Max U

Chapter 14. We Can Save an Ethical Humanomics

Acknowledgments

Llibre resumit amb IA

 El llibre "Beyond Positivism, Behaviorism, and Neoinstitutionalism in Economics" de Deirdre Nansen McCloskey proposa una nova aproximació a la ciència econòmica anomenada "humanomics", que complementa les metodologies existents amb una consideració seriosa de la parla humana, la retòrica, les idees i el significat en l'economia. L'autora argumenta que per obtenir una ciència econòmica adequada, es necessita una teorització més àmplia i rigorosa i un empirisme més seriós que l'actual.

Crítica de les metodologies existents:

• Economia Samuelsoniana i Positivisme: McCloskey critica la metodologia dominant en economia, que va prendre la seva forma final en la constitució de l'economia Samuelsoniana de Tjalling Koopmans el 1957. Aquesta metodologia recomanava una especialització teoricopráctica, amb teòrics aïllats de l'empirisme per "protegir" ambdues àrees. L'autora també critica el positivisme lògic, que ha influït en els economistes i que tendeix a ignorar les qüestions de significat i retòrica.
• Conductisme (Behaviorisme): El llibre va més enllà de la forma de la ciència econòmica per centrar-se en l'objecte substantiu, argumentant que l'economia mateixa té una retòrica i que necessita teories de la ment humana que vagin més enllà del simple conductisme. Critica la visió de l'humà com a "Mr. Max U," un sociòpata narcisista que maximitza la seva utilitat, subjecte només a les regles del joc.
• Neoinstitucionalisme: McCloskey també critica el neoinstitucionalisme per utilitzar les eines de l'economia "neoclàssica" i per la seva visió reduccionista del comportament humà i el seu tractament de les institucions com a simples "regles del joc". Argumenta que el neoinstitucionalisme sovint no aconsegueix mesurar l'impacte de les institucions i negligeix el paper de les idees i el llenguatge en el canvi econòmic. Segons McCloskey, les "regles del joc" estan constantment en discussió i influïdes per la conversa humana.

Proposta de "Humanomics":

• Integració de les Humanitats: "Humanomics" proposa una ciència econòmica que integri la immensa informació sobre l'acció humana que es pot obtenir de les humanitats, incloent la literatura, la filosofia, la història, la retòrica i la lingüística. Argumenta que les humanitats són necessàries per a una ciència descriptiva, ajudant a definir categories econòmiques importants i a comprendre el significat de l'acció humana.
• Importància del Llenguatge i la Retòrica: El llibre subratlla que el llenguatge importa i que els canvis en el llenguatge de l'economia són rellevants per al funcionament dels mercats i la innovació. Argumenta que una part significativa de la renda salarial prové de la "sweet talk" (persuasió) burgesa i femenina.
• Ètica i Idees: McCloskey sosté que el Gran Enriquiment des de 1800 va sorgir de l'ètica i la retòrica, específicament de la dignitat del liberalisme i la llibertat econòmica, més que de l'acumulació de capital o l'explotació. Les idees, no només els incentius, són la base d'aquest enriquiment.
• Mesurament Ampli: Una "humanomics" adequada inclou mesurament, però va més enllà de l'econometria oficial, abastant simulacions, gràfics, lectura, mapes, experiments i qüestionaris, i sobretot, escoltant. La comparació internacional es considera una forma important de mesurament en la perspectiva humanista.

Debats i Crítiques:

• Resposta al Neoinstitucionalisme: McCloskey respon a les crítiques del neoinstitucionalisme, argumentant que aquest no té prou en compte el paper autònom de les idees i la retòrica. Critica la noció de les "condicions de llindar" de Douglass North i altres, argumentant que la nova ideologia del liberalisme a l'Europa nord-occidental després de 1776 va ser crucial.
• Intercanvi amb Greif i Mokyr: L'autora discuteix amb Avner Greif i Joel Mokyr sobre el paper de les institucions, la motivació i la importància de les humanitats per a la ciència econòmica. McCloskey argumenta que definir els incentius de manera tan àmplia que incloguin expectatives, creences i normes internalitzades converteix l'economia en una tautologia sense contingut científic específic.
• Diàleg amb Daniel Klein: El llibre també examina l'obra de Daniel Klein, un altre defensor d'una aproximació més humanista a l'economia. McCloskey elogia la seva capacitat de categorització i la seva consideració de les idees i la coordinació en l'economia.
• Ètica i Responsabilitat: "Humanomics" emfatitza la importància de l'ètica i la responsabilitat en l'economia. L'autora destaca com la paraula "responsabilitat" va adquirir la seva prominència moderna en un context comercial als segles XVIII i XIX.

En resum, "Beyond Positivism, Behaviorism, and Neoinstitutionalism in Economics" advoca per una ciència econòmica més rica i completa que integri les perspectives i les eines de les humanitats per comprendre millor la complexitat de l'acció humana i les forces que impulsen l'economia, especialment el paper crucial de les idees, la retòrica i el significat.

Economic science needs humanities

 Bettering Humanomics. A New, and Old, Approach to Economic Science

Podcast

The discoveries I have made by responding critically, yet as amiably as I could manage, are two:

1. There seems to be emerging a new and I think more serious and sensible way of doing economic science—quantitatively serious, philosophically serious, historically serious, and ethically serious, too, as I argue in this volume. The economist Bart Wilson and a few others nowadays call it the “humanomics,” as in the title here.4

2. But, I argue in the other volume, neoinstitutionalism, from Douglass North and Daron Acemoglu and many other economists and political scientists, is not the way forward. Scientifically speaking, its factual claims, like those of the other recent neobehaviorist fashions, such as neuroeconomics and behavioral finance and happiness studies, are dubious—or, at best, questionably founded and argued. The neoinstitutionalists, like the others, do not listen, really listen, to the evidence of humans, or to their friends’ scientific questions and objections. Substantively, they treat creative adults like a flock of little children, terrible twos, to whom we need not listen. We need, they say, merely to “observe their behavior,” omitting for some reason linguistic behavior. And then we record the behavior in questionable metrics. The children-citizens will be pushed around with “incentives,” beloved of Samuelsonian economists and econowannabes. From a great height of fatherly expertise in discerning and designing Max U institutions, the neoinstitutionalist looks down with contempt on the merely human actions and interactions of free adults.

A key book by controversial Deirdre McCloskey, this is the outline:

Part I. The Proposal

Chapter 1. Humanomics and Liberty Promise Better Economic Science

Chapter 2. Adam Smith Practiced Humanomics, and So Should We

Chapter 3. Economic History Illustrates the Problems with Nonhumanomics

Chapter 4. An Economic Science Needs the Humanities

Chapter 5. It’s Merely a Matter of Common Sense and Intellectual Free Trade

Chapter 6. After All, Sweet Talk Rules a Free Economy

Chapter 7. Therefore We Should Walk on Both Feet, Like Ludwig Lachmann

Chapter 8. That Is, Economics Needs Theories of Human Minds beyond Behaviorism

Part II. The Killer App

Chapter 9. The Killer App of Humanomics Is the Evidence That the Great Enrichment Came from Ethics and Rhetoric

Chapter 10. The Dignity of Liberalism Did It

Chapter 11. Ideas, Not Incentives, Underlie It

Chapter 12. Even as to Time and Location

Chapter 13. The Word’s the Thing

Part III. The Doubts

Chapter 14. Doubts by Analytic Philosophers about the Killer App Are Not Persuasive

Chapter 15. Nor by Sociologists or Political Philosophers

Chapter 16. Nor Even by Economic Historians

Resum amb IA

El llibre "Bettering Humanomics: A New, and Old, Approach to Economic Science" de Deirdre Nansen McCloskey proposa una nova aproximació a la ciència econòmica anomenada "humanomics". Aquesta perspectiva accepta els models, les matemàtiques, l'estadística i els experiments de l'ortodòxia econòmica actual (circa 2021), però hi afegeix la immensa informació que es pot obtenir sobre l'acció humana en l'economia a partir de les nombroses formes de parla humana. McCloskey argumenta que els economistes haurien de considerar evidència provinent de fonts diverses com les notícies, la retòrica en experiments controlats, el testimoni de gent de negocis, la xafarderia, els experiments interespecífics, la política, les reflexions ètiques i epistemològiques, les històries dels historiadors, les reflexions dels teòlegs, les introspeccions de poetes i filòsofs, les enquestes d'opinió pública i la saviesa de les arts visuals. En resum, la idea central és que els economistes haurien d'utilitzar tota l'evidència disponible per ser científics seriosos.

McCloskey sosté que l'economia, com altres ciències i com la resta de la vida d'una espècie parlant, té una "retòrica", és a dir, utilitza metàfores, històries i epistemologies. L'autora va escriure una trilogia durant els anys 80 i 90 sobre aquest tema, urgint els economistes a ser conscients de la seva retòrica per tal de desenvolupar una ciència madura. Amb aquest nou llibre i el seu acompanyant, "Beyond Behaviorism, Positivism, and Neoinstitutionalism in Economics", McCloskey va més enllà de la forma de la ciència econòmica per centrar-se en l'objecte substantiu: l'economia mateixa té una retòrica.

La proposta de "humanomics" defensa que una ciència econòmica millor ha de tenir en compte la parla i la ment humana més enllà del conductisme. L'autora critica el que anomena "nonhumanomics", que il·lustra amb problemes en la història econòmica. Argumenta que l'economia necessita teories de la ment humana que vagin més enllà del simple conductisme. McCloskey aprèn tant de Faust com de l'arbitratge de la paritat de tipus d'interès cobert, subratllant l'ampli espectre de l'aproximació "humanomics".

Una part crucial de "humanomics" és la importància de la "sweet talk" (conversa amable) en una economia lliure. McCloskey presenta dades empíriques que suggereixen que aproximadament una quarta part de la renda salarial en una societat de gent lliure prové de la persuasió burgesa i femenina, no d'ordres o informació. Posa exemples de diverses professions on una part significativa del temps es dedica a persuadir, des de advocats i jutges fins a directius i professors. Aquesta persuasió és el que fa funcionar el rellotge econòmic. L'economia formal de la màxima utilitat no pot explicar la "sweet talk", tot i que aquesta és de gran importància.

La "killer app" (aplicació estrella) de la "humanomics" és l'evidència que el Gran Enriquiment (l'augment significatiu de la riquesa des de 1800) va sorgir de l'ètica i la retòrica, i no principalment de l'acumulació de capital o l'explotació jeràrquica. McCloskey argumenta que la dignitat del liberalisme, la idea d'honrar socialment totes les persones, juntament amb la llibertat per entrar en nous oficis i protegir la llibertat econòmica, van ser necessàries i suficients per encoratjar la innovació i el creixement. Són les idees, no els incentius per si sols, els que subjacen a aquest enriquiment. El canvi crucial cap al 1700 va ser un clima de persuasió que va portar a la reflexió, l'emprenedoria i el pluralisme del món modern.

McCloskey fa referència a l'obra d'Adam Smith com un practicant primerenc de la "humanomics". El seu primer llibre, "La Teoria dels Sentiments Morals" (1759), tracta sobre com conversem sobre l'ètica, especialment la virtut de la temprança. Fins i tot a "La Riquesa de les Nacions" (1776), Smith menciona la importància de la persuasió en la divisió del treball.

El llibre també aborda dubtes i crítiques a la "killer app" per part de filòsofs analítics, sociòlegs i historiadors econòmics. McCloskey respon a aquestes objeccions, defensant la importància de la "humanomics" i la seva capacitat per explicar el Gran Enriquiment millor que les explicacions materialistes o institucionalistes. Per exemple, critica la visió de Douglass North i els neoinstitucionalistes per negligir el paper autònom de les idees i la retòrica. També respon a les crítiques sobre la manca de definició de "llibertat" o "dignitat humana" i la suposada falta d'atenció a la desigualtat, argumentant que aquests temes es tracten en la trilogia sobre l'Era Burgesa i en altres treballs.

En conclusió, "Bettering Humanomics" proposa una reorientació de la ciència econòmica cap a una perspectiva més humanista que integri la parla, la retòrica, l'ètica i les idees com a factors crucials per comprendre el funcionament de l'economia i, especialment, les causes del Gran Enriquiment. L'autora convida els economistes a escoltar realment la conversa humana per tal de millorar la seva comprensió del món econòmic.

Humanomics

A Kirznerian Economic History of the Modern World

A l'Upton forum del 2010 la Deirdre McCloskey va fer una conferència provocadora amb motiu dels treballs Israel Kirzner. Cal llegir-la sencera. Es tracta d'una reflexió molt oportuna sobre l'anàlisi econòmica i la importància de l'emprenedor, la descoberta i la creativitat. Al principi hi trobareu tota una declaració en un to personal que més d'un podria subscriure:

How I wish I had earlier read Mises—the senior colleague of Friedrich Hayek and the teacher of Kirzner! It would have sped up my intellectual development by two or three decades, and given me more respect for the entrepreneur-centered thinking of my friendly opponent early in my career as an economic historian, the historian David Landes. It might have allowed me as early as the 1970s to use the Kirznerian entrepreneur to make progress on the puzzle of economic growth—instead of having to wait until the 2000s, painfully extracting myself over the decades from a Samuelsonian-Friedmanite devotion to equilibrium and routine.

PS. Sobre el títol del post. Humanomics es refereix al darrer estadi del viatge intel.lectual de McCloskey als 68 anys, economia per a humans de cap a peus.(així ho explica a la p.2)

PS. El blog Coordination Problem m'ha ofert la pista d'aquest treball i diu:

In my opinion, McCloskey's paper is required reading for all who want to understand why some nations grow rich while others languish in poverty.  It is a continuation of the argument presented in her Bourgeois Dignity: Why Economics Cannot Explain the Modern World.  McCloskey summarizes her argument nicely here, and she pursues the entrepreneurial element in the story in her reflections on Kirzner and Austrian economics.  I have attempted to address her thesis in my essay "A Behavioral Approach to the Political and Economic Inquiry Into the Nature and Causes of the Wealth of Nations."
Many elements in McCloskey's argument remind me of the nuanced argument made by Tyler Cowen in a very underappreciated essay of his -- "Entrepreneurship, Austrian Economics, and the Quarrel Between Philosophy and Poetry."

PS. Si us interessa la història del pensament econòmic, en Kirzner té un llibre: The Economic point of view i aquí hi ha molts més materials.

PS. Notícia trista. A Catalunya el govern compra pistes d'esquí. Tenia Vall de Núria i la Molina. Ara ja té Vall de Bohí, Port-ainé i Espot. I es prepara per comprar VallTer. Té sentit la propietat pública de 6 estacions d'esquí? Ens ho podem permetre això en un moment que arribem a tenir els impostos directes més elevats de l'OCDE després de Dinamarca?. Definitivament, les paraules de North s'han fet pels que prenen aquestes decisions però no les han tingut en compte:

“The key to political order, is the establishment of credible bounds on the behavior of political officials”.

Douglas North.  Understanding the Process of Economic Change. Princeton: Princeton University Press.2005, p. 107

PS. Com veieu he començat l'any parlant de tot, menys de salut. Massa boira ens envolta. Si necesiteu la dosi diària aquí va. Fa unes setmanes vaig intentar ordenar unes quantes idees, una darrera l'altra, i vaig fer aquesta conferència al Col.legi de Metges de Barcelona en el marc del Fòrum de la Professió Mèdica.

PS. L'entrada més vista del blog el 2011 ha estat: El gran engany gairebé 900 visites.

The bourgeois deal

Leave Me Alone and I’ll Make You Rich. HOW THE BOURGEOIS DEAL ENRICHED THE WORLD

by DEIRDRE NANSEN MCCLOSKEY AND ART CARDEN

El llibre "Leave Me Alone and I'll Make You Rich: How the Bourgeois Deal Enriched the World" de Deirdre Nansen McCloskey i Art Carden argumenta que el "Bourgeois Deal" (tracte burgès) ha estat la clau per a l'enriquiment significatiu del món. Aquest tracte, articulat per un home burgès en una cafeteria de Londres el 1820 o per una dona burgesa el 2020, es resumeix en la frase del títol: "Deixa'm en pau i t'enriquiré". Els autors defineixen "burgès" com pertanyent a la classe mitjana urbana, amb mentalitat empresarial.

El llibre ofereix una predicció optimista que el món prosperarà enormement si la gent afavoreix la llibertat i la seva teoria, el liberalisme en el sentit clàssic nascut fa dos segles. McCloskey i Carden sostenen que l'enriquiment massiu del món no es deu principalment a explicacions materialistes, sinó a canvis en l'ètica, la retòrica i la ideologia dels europeus del nord-oest i, ara, del món, que van conduir al liberalisme, l'innovisme i l'enriquiment. Aquest llibre és presentat com una elaboració popular de la trilogia acadèmica anterior de McCloskey sobre l'Era Burgesa.

Els autors il·lustren la magnitud d'aquest enriquiment comparant la vida de Fantine a "Les Misérables" el 1832 amb la d'una mare soltera amb dos fills a Birmingham, Alabama, el 2014. Tot i que la situació a Birmingham no és ideal, és vastament més còmoda materialment que la de Fantine, amb accés a aigua corrent, sanitat que funciona, alfabetització i suficient per menjar. Aquest "frenètic millorament" portat pel Tracte Burgès ha multiplicat les veus en la conversa artística i espiritual, tant com el menjar i el refugi. L'èxit al carrer Beale a Memphis, "la llar del blues", requeria un esperit emprenedor i una ment creativa, possibles gràcies als permisos del Tracte Burgès i a l'abundància moderna d'instruments musicals.

El nucli ètic del Tracte Burgès es descriu com l'orgull de ser un "comerciant just", amb una indústria tranquil·la i tenaç, fent concessions i mostrant consideració, i buscant la millora contínua en els negocis que generen intercanvis mutuament avantatjosos. Aquest tracte ha competit amb altres quatre maneres d'organitzar la societat que substitueixen la cooperació per la coerció: el Tracte de la Sang Blava (aristocràtic), el Tracte Bolxevic, el Tracte Bismarkià (estat del benestar modern) i el Tracte Burocràtic. Els autors argumenten que aquests últims han conduït a la pobresa, la matança o han imposat obstacles als innovadors.

El Tracte Burocràtic, en particular, es caracteritza per la lògica de "Mare, puc innovar?", on el millorament es realitza per permís d'una aristocràcia d'experts, sovint resultant en estancament tecnològic. En contrast, el Tracte Burgès respon a aquests altres amb un "ocupa't dels teus assumptes". Argumenta que l'emprenedor és responsable davant els banquers, els empleats, els proveïdors i, sobretot, els clients que voten amb els seus diners. La regulació burocràtica, tot i que pretén protegir els consumidors, sovint protegeix els interessos tradicionals de la competència, i és menys eficaç que una opinió pública activa en una societat amb llibertat d'expressió.

El llibre també explora la història canviant de la percepció de la burgesia. En contrast amb obres com "The Shoemaker's Holiday" de Thomas Dekker (1599), que sembla "burgesa" però celebra la jerarquia antiburgesa, "The London Merchant" de George Lillo (1731) va inaugurar la "tragèdia burgesa", donant veu i fins i tot honor a la gent de negocis. Aquesta obra reflecteix una nova valoració dels comerciants honestos i de la dignitat de la seva professió. La Revaluació també es manifesta en "Don Quixote" de Cervantes (1605), on el noble Quixot representa qualitats que van portar al fracàs econòmic espanyol, en contrast amb el pragmàtic Sancho Panza.

La difusió de la lectura gràcies a la premsa d'impremta i la Reforma van ser factors crucials per a l'ascens del Tracte Burgès. La traducció de la Bíblia a llengües vernacles va permetre una participació religiosa més àmplia i va fomentar l'individualisme. Adam Smith és presentat com un articulador clau de la ideologia del Tracte Burgès, defensant la importància del coneixement local i la iniciativa individual per sobre de la planificació estatal, sempre dins d'un marc ètic. Smith va elogiar la "integritat absoluta i la senzillesa de maneres" dels comerciants, juntament amb l'amor per l'aprenentatge i la generositat.

En conclusió, "Leave Me Alone and I'll Make You Rich" defensa que el Tracte Burgès, basat en la llibertat econòmica i la dignitat de la innovació i el comerç, ha estat la força motriu darrere de l'enriquiment sense precedents del món. Els autors conviden a la societat a alliberar els adults perquè puguin aventurar-se, amb la protecció bàsica d'un govern modest, com la millor manera de continuar el progrés.

Unfortunately things are not so crystal clear, the world may be better but it is not because the burgeois deal, many things contribute to it. Avoid any infograhic reductionism.

Undermining agency theory

The Rhetoric of the Economy and the Polity

Two statements from an excellent article by D. McCloskey:
 
A criticism on agency theory:

The Great Recession gave us all some perspective on how agency theory works. The deepest problem in agency theory in any of its forms (public choice, law-and-economics, finance, whatever) is the same as the problem in prudence-only political theory, subject to the Nussbaum Lemma. The theory declares that one has an “obligation” tomake profit (and further that the economic analyst has an obligation to articulate such a theory, always, and has an obligation not to talk about the ethics of  managerial or scientific obligation, since these are matters of value about which one has an obligation not to dispute). But where does the obligation come from? It comes in fact from the ethical responsibilities of a manager to her professionalism, her stewardship, her stakeholders’ interests, or her promotion of the common good. The agent is not a pure prudence-only, Max U creature after all, just as the Hobbesian selfish individual is not. In the very theory that
denies ethics to the agent, she is imagined to be driven by an ethic, albeit a tacit and abbreviated one. Kant fell into a similar self-contradiction when he claimed to base ethics on reason alone, yet gave no account of the reasons an agent would want to act on reason.

About the crisis:

If we have a crisis, it is one of ethics. Bad People (mainly Bad Men) did it. But the baddest men are the political theorists and business-school professors who recommend an approach to the politics of life that omits the virtues. Is that you, looking at yourself in the mirror?

My understanding is that we have emphasized agency teory beyond its initial purpose. The combination of agency and utilitarism forgets professionalism. I share the view of McCloskey.

PS. 30 years after Fama-Jensen famous article on separation ownership and control.

PS. Another article against agency theory.

PS. Nussbaum Lemma:  I think it implausible to suppose that one can extract justice from a starting point that does not include it in some form, and I believe that the purely prudential starting point is likely to lead in a direction that is simply different from the direction we would take if we focused on ethical norms from the start.
McCloskey interpretation: You have to put the rabbits into the hat if you are going to pull them out.

What explains economic growth?

Bourgeois Equality. How Ideas, Not Capital or Institutions, Enriched the World

This is the great question that Deirdre Nansen McCloskey tries to answer in her last book of the trilogy. If we want to continue to improve our living standards we should confirm that we are on the right track. And she says:

"an anti-bourgeois rhetoric, specially if combined with the logic of vested interests, has in many ocasions damaged societies"

She focuses specially on how specific places changed their views on those that create value. Part IV explains how a pro-bourgeois rhetoric was formed in England around 1700:

In other words, the attitude of medieval Europe and its church toward the bourgeoisie was nothing like entirely hostile, especially in northern Italy and in some of the ports of Iberia and the Baltic, even if it did not result in the business-dominated civilization of the southern Low Countries after 1400, and more widely Holland after 1568, and England after 1688. Barcelona, for example, was from medieval times an exception to the antibourgeois character of the rest of Spain—as in some ways it still is, and as Basque Bilbao came to be in the nineteenth century

 Realizing the potential depended on a bourgeois ideology adopted by whole societies, not merely by the bourgeoisie itself. The ideology had been foreshadowed in the Hanse towns such as Lübeck and Bergen and Danzig, and in some trading towns of southern Germany, and in the prosperous little cities of Flanders and Brabant, in Barcelona, in the Huguenot strongholds of France, and especially in the northern Italian cities such as Venice, Florence, Genoa, and the rest.

In summary, a change in ideas modified deeply wealth creation. I can't summarise 768 pages. My recommendation is to read it if you are interested in economic history. The key questions are answered there and in two previous books. You may agree or not, but persuasive style of Mccloskey is guaranteed. Some parts are repetitive and controversial, but the amount of quotes and knowledge is amazing. You'll enjoy the impressive erudition of Deirdre McCloskey.

PS. Today in the news has started a new anti-bourgeois campaign, the goal is to increase the taxes of the super-rich. It just sounds really as the opposite of what Deirdre says that has allowed us the betterment process of the last three centuries. Our economics minister is professor of economic history. It would be good that somebody gifts him the book and convinces him to read it.

PS. While I was studying my PhD, in rhetorics course, Deirdre came. I will always remember how she argued about the need to change economic methodology. Unfortunately after two decades, the academic profession has taken the opposite direction, a mathematical perspective.

PS. Eduard Bonet, from ESADE, is quoted several times in the book. I would like to acknowledge his guidance on this topic.

Mazzucato as a supplier of a flattering narrative for politicians

 The Myth of the Entrepreneurial State

Some delicious words by Deirdre McCloskey on Mazzucato recent contributions:

Mazzucato, a loyal daughter of the left, is suspicious of private gain, of the sort you pursue when you go shopping, say, and is therefore suspicious of people doing things for a private reward. She wants the State, advised by herself, to decide for you. Yet the private entrepreneur, she would concede, gets a reward if she pleases her customers. And it is in fact what Mazzucato in her own trade has done. She has parachuted herself into the center of the debate about the role of state planning as against private profit-making for innovation and allocation. It is not because she is innovative herself (though that is what her brave rhetoric suggests), but because she is, market-style, giving people what most of them want: magical thinking, mythical certitude, free lunches all around, wise and loving parents guiding the people in a coerced routine from on high. Modern “statism.” Her theory is the illiberal one that has dominated economics since John Maynard Keynes eight decades ago spoke out loud and bold.

 The statists imagine that it is always COVID-19 time, for anything: the legitimate actions by a State to suppress a plague or a forest fire or a military invasion are to be applied to all manner of private matters, always, with no such persuasive claim to legitimacy as fighting plagues, forest fires, or invasions, being technically speaking public goods. Braiding hair for a living is to be regulated by the State. Innovation and allocation, says Mazzucato in particular, are to be socialized.

And we could say that Deirdre is a loyal daughter of the right. And no problem. However, you may imagine what follows...in her book. I have read Mazzucato and part of her arguments are convincing. However, there is a need for a balanced perspective according to the current trends. Deirdre provides such perspective. A book that deserves to be read.

Creative destruction or how to save capitalism from the capitalists

The Power of Creative Destruction. Economic Upheaval and the Wealth of Nations

This book is an invitation to a journey: a journey through economic history, more specifically a journey to explore the enigmas of economic growth through the lens of creative destruction.

Creative destruction is the process by which new innovations continually emerge and render existing technologies obsolete, new firms continually arrive to compete with existing firms, and new jobs and activities arise and replace existing jobs and activities. Creative destruction is the driving force of capitalism, ensuring its perpetual renewal and reproduction, but at the same time generating risks and upheaval that must be managed and regulated.

This is precisely what this book explains. And behind the driving force of capitalism, you'll find ideas, as Deirdre McCloskey dixit. 

From Shumpeter:

The first idea is that innovation and the diffusion of knowledge are at the heart of the growth process.

The second idea is that innovation relies on incentives and protection of property rights

The third idea is creative destruction: new innovations render former innovationsobsolete. In other words, growth by creative destruction sets the stage for apermanent conflict between the old and the new: it is the story of all incumbent firms, all the conglomerates, that perpetually attempt to block or delay the entryof new competitors in their sectors.

Creative destruction thus creates a dilemma or a contradiction at the very heart of the growth process. On the one hand, rents are necessary to reward innovation and thereby motivate innovators; on the other hand, yesterday’s innovators must not use their rents to impede new innovations. As we mentioned above, Schumpeter’s answer to this dilemma was that capitalism was condemned to fail precisely because it was impossible to prevent incumbent firms from obstructing new innovations. Our response is that it is indeed possible to overcome this contradiction, in other words to regulate capitalism or, to take the title of Raghuram Rajan’s and Luigi Zingales’ 2004 book, to “save capitalism from the capitalists.”

PS. Shelling on the strategy of conflict.

L'estudiant t

The Unreasonable Ineffectiveness of Fisherian 'Tests' in Biology, and Especially in Medicine.

La solidesa d'alguns raonaments científics, en economia i en medicina, acaba necessitant de l'estadística. Ara bé, l'ús que se n'ha fet té forats notables. Això és el que des de fa anys Deirdre McCloskey explica sobre l´ús i abús dels tests estadístics. En aquest article amb el que m'he topat recentment ho exposa de forma senzilla:

Grantors, journal referees, and tenure committees in the statistical sciences had faith that probability spaces can substitute for scientific judgment. A finding of p < .05 is deemed to be “better” for variable X than p < .11 for variable Y. It is not. It depends on the oomph of X and Y —the effect size, size judged in the light of how much it matters for scientific or clinical purposes. In 1995 a Cancer Trialists’ Collaborative roup, for example, came to a rare consensus on effect size: 10 different studies had agreed that a certain drug for treating prostate cancer can increase patient survival by 12%. An 11th study published in the New England Journal in 1998 dismissed the drug. The dismissal was based on a t -test, not on whatWilliam Gosset (the “Student” of Student’s t ) had called, against Ronald A. Fisher’s machinery, “real” error.

PS. Recordant el gran Francesc Pujols als 50 anys de la seva mort, i esperant el compliment de la seva predicció al Concepte General de la Ciència Catalana :

Perquè seran catalans, totes les seves despeses, on vagin, els seran pagades [...] . Al cap i a la fi, i pensant-hi bé, més valdrà ser català que milionari.

Book choice

Bettering Humanomics: Beyond Behaviorism and Neo-Institutionalism

Next book by Deirdre McCloskey

Humanomics

By Vernon Smith

Mazzucato as a supplier of a flattering narrative for politicians (2)

Mission Economy. A Moonshot Guide to Changing Capitalism

My former post on a recent book by Mazzucato was based on a comment by McCloskey. Now, she has published a new one, and the best comment has been made by John Kay, clear message, I don't have anything to add.

Ever since 1969, people have asked themselves why if humans can land on the moon, can’t they solve pressing problems here on Earth, such as poverty, dementia and climate change. Mariana Mazzucato offers an answer: if only governments would apply the mission-driven methods of the Apollo project, they could.

Mission Economy, the new book from the high-profile economist noted for her advocacy of a more active state, contains many screenshots of the whiteboards beloved of brainstorming meetings, each with an ambitious goal at the top: secure the future of mobility, clean oceans, defeat cancer; below is a jumble of boxes and circles linked by multidirectional arrows.

We need a “solutions based economy”, driven and co-ordinated by more powerful governments engaged in every stage of the process of innovation.

But Apollo was a success because the objective was specific and limited; the basic science was well understood, even if many subsidiary technological developments were needed to make the mission feasible; and the political commitment to the project was sufficiently strong to make budget overruns almost irrelevant. Centrally directed missions have sometimes succeeded when these conditions are in place; Apollo was a response to the Soviet Union’s pioneering launch of a human into space, and the greatest achievement of the USSR was the mobilisation of resources to defeat Nazi Germany.

Nixon’s war on cancer, explicitly modelled on the Apollo programme, was a failure because cancer is not a single illness and too little was then — or now — understood about the science of cell mutation. Mao’s Great Leap Forward, a vain bid to create an industrial society within five years, proved to be one of the greatest economic and humanitarian disasters in human history. At least 30m people died.

Democratic societies have more checks and balances to protect them from visionary leaders driven by missions and enthused by moonshots, but the characteristics which made the Great Leap Forward a catastrophe are nevertheless still evident in attenuated version.

With political direction of innovation we regularly encounter grandiosity of ambition and scale; the belief that strength of commitment overcomes practical problems; an absence of honest feedback; the suppression of sceptical comment and marginalisation of sceptical commentators. All these were seen in Britain’s experience with Concorde, the Channel Tunnel and the AGR nuclear reactor programme, some of the worst commercial projects in history. More recently, there is the £12bn wasted on the NHS computerisation programme — a project that Mazzucato mentions, though only to blame private contractors for their failure to deliver on the political imperative.

On a smaller scale, Britain has suffered in the last year from the delays resulting from Public Health England’s insistence on central control of the coronavirus testing programme and the predictable fiasco of the attempt to sideline the expertise of Apple and Google in order to develop a uniquely advanced NHS test and trace app. And in September there was prime minister Boris Johnson’s “operation moonshot”, designed to control the coronavirus by testing 10m people daily in early 2021.

In contrast to these failures, the rapid development of vaccines is, at least provisionally, a success story. That development is not the product of visionary central direction but is the result of a competitive process with many different teams around the world attempting to be among the first across the finishing line.

Their work has drawn on a combination of existing academic science with the expertise in development and testing and the manufacturing and logistics capabilities of the global pharmaceutical industry. The role of government, appropriately, has primarily been in funding basic research and assuring that there will be a rewarding market for successful products.

Mazzucato lists “twenty things we wouldn’t have without space travel”. Athletic shoes, CAT scanners, home insulation, baby formula, artificial limbs. Yes, really. But beyond the ridiculous headline, we see the reality of productive innovation: a decentralised process in which developers draw on and help create the collective intelligence that leads to constant incremental improvement in so many fields — including better running shoes.

When historians of technology review the past 50 years, they may conclude that Neil Armstrong exaggerated when he announced “one giant leap for mankind”. The “new frontier” of the late 1960s turned out to be, not space, but information technology. And the development of IT was characterised by a striking absence of centralised vision and direction.

No moonshots; but piecemeal innovation through disciplined pluralism in which temporary winners were almost always displaced as they failed to anticipate the next step of the journey. Do you remember Digital Equipment, Word Perfect, Wang Laboratories, CompuServe, Netscape, AOL, BlackBerry? Each once a leader, now forgotten. Even Apple suffered more than one near-death experience, Microsoft failed to anticipate mobile computing or the cloud, IBM was swept out of the industry it had created.

Mazzucato has correctly emphasised the contribution of state funded basic research to Silicon Valley, but thank goodness the development was in the hands of Steve Jobs, Travis Kalanick and Elon Musk rather than a committee in the department of commerce.

No one has, or could have, the knowledge of present or future required to create or implement successfully the strategies that Mazzucato recommends. Take her modern signature example — Germany’s Energiewende, or energy transition to renewables. You will not learn from Mission Economy that this highly political, much publicised and wildly expensive project has brought about significantly smaller reductions in carbon emissions than Britain’s quiet, economically and socially beneficial substitution of gas for coal.

The failure of the Energiewende illustrates the dangers of moonshots and the mission economy. As talk of a “Green New Deal” becomes more frequent on both sides of the Atlantic, the prospect of more large, costly and ineffectual visionary projects grows.

Politicians readily fall in love with such proposals, and Mazzucato is not shy in reminding us how anxious they are to engage with her in discussing them. But the vision that propelled China’s economic development was not Mao’s Great Leap Forward or Cultural Revolution, but Deng’s “it doesn’t matter whether a cat is black or white if it catches mice”. It is more rewarding and effective to build better mousetraps than to shoot for a mice-free world.

John Kay is an economist, author and fellow of St John’s College, Oxford

 

Economic Ethics

Oxford Handbook of Professional Economic Ethics

Some economists, while watching the film Inside job, were astonished by Martin Feldstein statements and justifications of banks with toxic assets. I was one of them. Too many conflicts of interest sorrounded his words. When I saw him, I thought, this is the "health economist" that wrote: Economic Analysis for Health Service Efficiency: Econometric Studies of the British National Health Service. n 1967 (!). This was one of my first readings in health economics many-many years ago.
While I was reading the following paragraph in a new book, I thought that the topic deserved a deeper approach to economists' ethics:

The question of whether there is a profound tension between our professional norms and our self interest deserves careful attention. Conflict of interest in economics gained much  (unwanted) attention after the documentary Inside Job accused some finance economists of doing analysis favorable to financial industry interests while receiving undisclosed  pay from those same interests. Even if you believe, as I do, that Inside Job was unfair to some of its targets, it did fuel a crisis of confidence in economists that we all have a  strong interest in correcting. The response has been to strengthen the norms that we  disclose possible conflict of interests in our research and policy recommendations; this is surely a good thing. An example from my own field of development is that researchers on foreign aid should disclose whether they are employees of or consultants to agencies  dispensing foreign aid (or conversely, recipients of funding from antiaid interests).

Yet the issue of conflict of interest is too complex to be so quickly dismissed by a simple  disclosure requirement.

The handbook by DeMartino and McCloskey is an excellent contribution to shed some light on the issue:

The case for economic ethics is simple and, we think, undeniable. Economists enjoy tremendous influence today over the life chances of others—innumerable others. That is the heart of the matter. The influence of economists arises from their expertise in a field vital to social wellbeing,
freedom, and other valued goals. As economists know better than anyone, when you monopolize a resource that others need, you exert power over them. Moreover, in recent years, economists’ influence has been amplified by institutional developments. Independent central banks, the  multilateral development banks, and other international financial institutions are often in a position to set economic policy and even engage in social engineering without much oversight by elected  officials or the public. Economists are at the helm of such institutions and occupy staff positions in the departments where the actual work gets done. Combined with its intellectual monopoly,  institutional power enhances the ability of the economics profession to alter the course of human affairs—for the better, of course, but also, sometimes, for the worse.

 ...

Influence over the lives of others, which can be immense, coupled with the risk of doing even substantial foreseeable and unforeseeable harm, implies that economic practice is ethically fraught. And yet the profession largely manages to ignore the attending burdens. Perhaps because economists understand that harm is universal in economics, the Hippocratic tradition appears to offer no insight into how economists should comport themselves. What does “do no harm” mean in a world where there are no free lunches and where all actions (including doing nothing) entail tradeoffs? And perhaps because economists often paint on big canvases, where they affect the lives of thousands or even millions of people all at once rather than individual clients one by one, clinical ethics seems largely irrelevant. The scale of economic interventions generates among economists a fear that serious and open engagement with professional ethical issues  would paralyze them with doubt in those moments of human need when what is called for instead is focused audacity.

 This is a real call for action into an improvement of practices and behaviors of economists.

Art Basel Hong Kong

What explains economic growth? (2)

Deirdre McCloskey presenting "How the World Grew Rich: The Liberal Idea, Not Accumulation or Exploitation" at Nobel Conference, Sept 29, 2016

PS. Quote of the day:_

What is crucial is our ability to engage in continuous conversation, testing one another, discovering our hidden presuppositions, changing our minds because we have listened to the voices of our fellows. Lunatics also change their minds, but their minds change with the tides of the moon and not because they have listened, really listened, to their friends' questions and objections.

 A.O. Rorty, "Experiments in Philosophical Genre: Descartes' Meditations," pp. 545-565 in Critical Inquiry 9: 562

PS.Economic History: Los orígenes de la industrialización catalana, o cómo Cataluña se convirtió en la pequeña Inglaterra

L'home del temps

Health Care Spending Issues In Advanced Economies

A la televisió, l'home del temps és temut pels hotelers. Si diu que plourà la gent es queda a casa, si no neva la gent no va a esquiar. Ells segueixen equivocant-se i el seu lloc de treball està assegurat, cap problema. Ja se sap, la meteorologia és una ciència inexacte i se li perdona. Ara bé, l'economia es dedica a altres coses que predir tempestes, és més, té semblances amb moltes altres disciplines i cap amb la futurologia. En Donald (ara Deirdre) McCloskey ho deia fa molts anys això a "La retòrica de la economia". Però la gent ho passa per alt. I una vegada més el FMI ens ofereix una perla digna de menció d'honor.
El Fons Monetari Internacional segueix els passos que la Unió Europea quan fa la predicció de la despesa sanitària futura. Però més notori encara, en el mateix document surt que Espanya es troba a 6,5% del PIB en despesa pública el 2008  i a les projecccions per al 2010 (p.12) ens diu que estarà a 5,9%  i al 2015 al 6,4% (quan ells mateixos diuen que el 2008 ja s'ha superat aquesta xifra). Embolica que fa fort!
Totes les altres previsions i mesures del document no m'interessen. Atorgueu al FMI el mateix crèdit que a l'home del temps, almenys pel que fa a aquesta qüestió. Eviteu de llegir-ho, és una pèrdua de temps garantida.

Un dia de tardor a Yannat al-Arif