Cooking the Books: A Nobel Prize for Non-Economics

[PJShannon]

Following is a discussion on the page titled: Cooking the Books: A Nobel Prize for Non-Economics.
Below is the discussion so far. Feel free to add your own comments!

[Anonymous]

I have heard many members of the SPGB using one of the textbook definition of economics along the lines of "The study of how societies use scarce resources to produce and distribute goods and services". By this definition Al Roth's work is clearly economics. The work of Roth which deals with unpriced goods and services (which is not all of his work, nor is it all of market design) is certainly within the remit of economics even if the nomenclature of market-design may seem to be inappropriate in such context.The use of the term market-design is because his work fits into the area of economics called market-design. A large part of market design is how one allows price to be determined within a market: one answer, the SPGB answer, might be "not at all". In which case there is a new question to answer: "How do we allocate goods and services without the price mechanism?". Roth attempts to deal with this problem. On his blog ( http://www.marketdesigner.blogspot.se/2013/01/market-design-for-everyone-from.html ) he discusses how his work is useful for socialists, citing this very article on which I am commenting.I think it is promising that a nobel prize went to work on how to allocate resources using non-market mechanisms. This is the very problem that the SPGB has to deal with if it is to persuade more than a fraction of a per cent of the world population that a world revolution is a good idea.   I find it a shame that this opportunity was used largely for an uninformed attack on the subject of economics;  it should be used to focus on how this research relates to the central problem of creating a functioning world socialism.I think that the author here, and socialists in general, underestimate what economics has to offer us in building a post-market society. 20th century economics is in large part an investigation into when markets fail to allocate some set of goods and services as "efficiently" as a (hypothetical) perfectly informed, computationally unbounded, social planner. The answer to this question is, roughly speaking, "Most of the Time!". A simlarly large part of economics is examining when non-market organisations– like governments, collective decision makers, uncoordinated groups — fail to allocate goods and services as "efficiently" as a hypothetical social planner. The answer to this question is also "Most of the Time!".In answering these two questions economists provide a critique of both free-market fundamentalists and pro-regulation economists. Indeed the battle ground in economics is generally over which "Most of the Time!" is more. Of course (proper) socialists can use both sets of arguments to critique reformists and free-market fundamentalists. However, the results of economics research is useful for more than being a critique of right and (reformist) left wing politics. 20th century economics defines very clearly many of the problems that socialists need to solve (assuming a lack of true superabundance, which the author accepts with his nod to Shaw). Moreover, economic research often offers solutions to these problems. Roth is an example of someone who has provided such a solution. On the other hand, I have heard little (nothing) about serious attempts by the party (an organisation which I have been in contact with for most of my life)  to deal with the substantive economic problems that face a post-market society. Given this would it be unreasonable to suggest that Roth through his work has done more towards creating a socialist society than has the SPGB. 

[ALB]

Thanks for that link:http://www.marketdesigner.blogspot.se/2013/01/market-design-for-everyone-from.htmlPeople should have a look at it. We said that Alvin Roth may have deserved a Nobel Prize (if for non-economics) and he returns the compliment by providing a link to our article.Someone else takes up our point of how can you speak of a "market" when price and money are not involved.

[Anonymous]

But your claim that he "deserved a Nobel Prize (if for non-economics)" is inaccurate. By the definition of economics it is clearly an economics problem to which he has contributed.Why does the party not engage with the fundamental problems of running a post-market society? If we can't show people, convincingly, that there is a way to solve such problems why should they even desire socialism, never mind put effort into making it happen. The lack of (real and scientific) answers to these problems is why the party stagnated in the early twentieth century. Solving these problems is necessary for making socialism possible. Part of solving these problems lies in the last 100 years of economic theory and research.p.s. I am the someone else who takes up your point.

[Young Master Smeet]

Part of the problem is that we don't need to engage in the detail of these solutions: all we need to demonstrate is that it is technically feasible to organise on a non-monetary/democratic basis.For example, the question of HS2, which is currently raising controversy, does not rest on a detailed knowledge of how a train engine works, only that such trains can be used on high speed lines.Of course, we'll use such mathematical/technical processes as are widely available and used in many firms already, and more: the brightest and best would be dedicated to these problems rather than engineering stock market purchasesing programmes; but I doubt whether the lack of a clear and detailed blue-print for a post market society is holding us back.And I say all this as one of the ones round here who spends perhaps too much time reading around the subject, and who found the News about Market Design Nobel economics quite exciting (BTW, maybe we should talk about a 'designed economy' rather than a 'planned economy', that could be useful…).

[ALB]

Alaric wrote:

one of the textbook definition of economics along the lines of "The study of how societies use scarce resources to produce and distribute goods and services".

That's one definition of economics and, clearly, on it, "economics" will have existed since the Stone Age and before and will still exist in socialism. But that's not how Marxian socialists have traditionally defined it. We have seen it as the study, essentially of the production and distribution of goods and services in societies where exchange (trade, buying and selling) is widespread. In these societies forces come into operation which act like natural laws imposing themselves on people and which some economics textbooks teach actually are natural laws. When we criticise "economics" it is its claim to be studying eternal facts of human existence, instead of just what happens at the present, capitalist stage of human social development. On this definition where there are no markets there is nothing to study.But it's silly to argue over definitions. To have a meaningful discussion all those taking part need to agree on definitions. So, let's go with yours. Obviously, then, we can't be against this, as the study of the allocating resources to meet human wants. That will happen in socialism and we are interested in ways of doing this in a non-market way. That is why the article commented favourably on Alvin Roth's work. Others who have won the Nobel Prize for Economics and who have made useful contributions to this are Wassily Leontief (1973, for his work on input-output tables) and Leonid Kantorovich (1975, for his work on linear programming).Actually, in answer to the followers of Ludwig Von Mises who argue that it is impossible to organise production and distribution rationally without prices, markets and money (so that socialism would be impossible) we have done some thinking on how a socialist society would be able to work without these. See:Chapters 4 and 5 of our pamphlet Socialism As A Practical Alternative.The “Economic Calculation” controversy: unravelling of a mythThe Alternative to CapitalismYou are knocking at an open door.

[Anonymous]

"That's one definition of economics"? It is also the definition of economics that the Nobel Prize committee use. It is also the definition used by economists; it is the what economists look at. If it is silly to argue about defininitions then the title of the article is silly, I think it is not helpful to Marxian socialists, or those trying to understand them, to use definitions that necessarily exclude what is studied by those who consider themselves to be studying economics. For example, I have heard many a socialist argument for dismissing the subject of economics. I have always assumed that these arguments were being dismissive of what was actually being studied. Now it seems that they are arguments against a "subject of economics" that does not describe the "subject of economics"a s actually practiced.Anyway, you are correct that it is better to discuss the substantive issues. I agree that Leontief and Kantorovich made vital intellectual contributions to solving resource allocation problems (and beating the Nazi's in the case of the latter). There are a many others who I would include from the list of Nobel laureates: George Akerlof, Joseph Sitglitz, Elinor Ostrom, Daniel Kahneman, Eric Maskin, Amartya Sen, Thomas Schelling to name a few.I don't want to comment in depth on the literature linked to until I have time to read it carefully (which I will). However, I would like to be a litter clearer about what I mean when discussing making a serious attempt to deal with the problems that a socialist society might face. This might also shed some light why I, contrary to the young master smeet, believe that not having a solid blueprint is a real barrier to the socialist movement.Socialism is a proposal to reorganise production, distribution (and social relations in general) with the promise that this new system of organisation will be better. To back such a proposal we ought to require at least two things: 1) that we can actually expect the society to be better than the current one; and 2) that moving to socialism is not exorbitantly risky (relative to staying with the current system) in that there is a significant probability of a socialist revolution spinning off into some kind of totalitarian state, violent anarch or other unpleasant outcome.The demonstration of 1) and 2) requires considerable work. It certainly requires more than rhetoric and anecdotal evidence. However. if  1) and 2) can''t be demonstrated satisfactorily then the only situation we ought to be saying "socialism now" is in the event that capitalism goes completely tits up. Although,  "Theoretical and Empirical research into the possibilty of socialism being ex-ante superior to continuing global capitalism NOW!" does not make a great chant. But then the SPGB has never really been that good at chants anyway.

[Anonymous]

Where is the demonstration that "it is technically feasible to organise on a non-monetary/democratic basis"? This demonstration needs to be applicable at a global level. And be feasible in the sense that it makes the world a better place (for some non-absurd definition of "better").

[Young Master Smeet]

Alaric wrote:

Where is the demonstration that "it is technically feasible to organise on a non-monetary/democratic basis"?

swell, it's all around us, and littered through history: ancient Empires organised on a grand scale, across different climate zones and with advanced division of labour, such as the Incas were organised on a moneyless basis[*].  All day, every day, we use non-monetary calculations in our workplaces to administer real resources and deliver services: supermarkets use vast repositories of data from marketing and research much more than they use price signals to control their stock; in our own families, we don't charge each otehr for our time, etc.Of course, as a socialist movement grows, we will need to move from general principles, and we can only imagine that there will be serious practical debates as a part of the growth of the movement.I don't see what Stiglitz's contribution can make to managing socialism: his critique of the market is interesting, but that seems to be about it. [*] Of course the Inca empire was not socialist, the point is that none-money organisation on a vast and ongoing scale has existed, and is thus not impossible.

[Anonymous]

The all important caveat:"This demonstration needs to be applicable at a global level. And be feasible in the sense that it makes the world a better place (for some non-absurd definition of "better")"1) The Incan empire* was tiny relative to the size of the current economy/global population. They were able to implement a non-monetary political economy that none of us would want to live in due to both the material and social conditions. The Incan Empire demonstrates the feasibility of running a command economy when the state carries, and uses, a huge whip. When I said Feasible I also said it needed to be better in some sense than the current system.2) It is a fair point that non-monetary calculations are used consistently used to run organisations. Indeed this was the focus of Herbert Simon's economic research (Nobel Prize 1978). However, the fact that large parts of society do not require market transactions to operate does not show the feasibility of creating a better society by having no market transactions. Let me try a couple of analogous, and absurd, arguments. a) The nucleus of an atom takes up a tiny fraction of the space filled by the atom. Indeed human beings are mostly space. Therefore, it is feasible to have human beings without any nuclei to their atoms. b) Humans do not need automated vehicles to travel. In fact, we see that humans spend most of their travelling time on foot. Therefore, we do not need to have automated transport in our society.I don't suspect those analogies will convince you. I seem to have failed to get across the level of evidence that I believe is required. To persuade someone (and this should include yourself) to back a socialist revolution then the evidence that it will be a better society needs to be very strong given the risks inherent in trying to set up a new and untried system of (hopefully self) governance. Why should anyone be willing to take the gamble of revolution? Should they be convinced that this is a good idea by examples of past societies that no-one would want to live in? Should they be convinced that because they don't need the market for everything that they don't need it for anything? The examples you give are, at best, prima-facie evidence for the feasiblity of a socialist society that is better than the current. The party has been saying that we will solve the practical issues as the movement grows. But the movement hasn't grown in over a hundred years! As a proportion of the population I suspect it has shrunk. Party members put this down to ignorance, false-consciousness or bad marketing. It seems plausible that the real reason is that the evidence for socialism being better than capitalism is thin on the ground; sorting out this shortfall ought to be a priority. * Here is a recent article by economists Acemoglu and Robinsion that mentions the Incans along with some other, what they call, state-capitalist societies in its discussion of  contemporary state capitalism. Not entirely relevant to this discussion but it may be of interest.

[Young Master Smeet]

Alaric wrote:

The examples you give are, at best, prima-facie evidence for the feasiblity of a socialist society that is better than the current.

I'd suggest that is all that is needful at present, for us (although that  is not to suggest that further research isn't useful).  Beyond that, I don't think we need to persuade people to a particular model of society at all, if we're right, then through class struggle such ideas will emerge and grow *of necessity*.

[Anonymous]

The prima-facie evidence clearly hasn't been sufficient to persuade more than a handful of people over to the socialist cause. It is hopeless to expect anyone to throw themselves behind a cause when it is so unclear as to whether its aims are desirable/feasible. By using the term "if we're right" you might as well be saying "we're not going to check if we're right". This attitude verges on milennialism.

[Young Master Smeet]

Sorry, I wasn't clear, not 'If we're right that socialism can work.' but 'If we're right that the class struggle will lead the working class to need to fight against the current system and replace it with some mechanism under its own control.' we can't check that, as such, since that's an analysis/prediction extrapolated from current and past events (we can, though, look for counter-indicative events/trends/logics).  We can feed in, and try and shape that debate with, the evolved ideas of the blue sky thinkers, as well as the gleaned crop of experimentally/theoretically proven methods.  After that, we can rely on the simple fact that folk are smart enough to run their own lives; for propaganda purposes, all we need are two things: to show it could work, and that society can change its organisational methods. Beyond that, and we're heading into utopianism.

[Anonymous]

Young Master Smeet wrote:

 for propaganda purposes, all we need are two things: to show it could work

 Change "could work" for "almost certainly would work" and I would agree with you. Life would have to get pretty bad before "could work" started to look appealing. But, even then I would be happy for decent evidence that it "could work".Do you think that you have evidence that it could work? Do you think the evidence that you gave is evidence that a socialist world could improve the lot of the working class?

[Young Master Smeet]

This is a useful discussion, since I'm slated to give a talk entitled 'Can socialism work' sometime in March. What I would say, is that in some senses, it doesn't matter: we're not selling a plan, or a thing in itself, we're selling class struggle.  We stand for the emancipation of the workers, and don't give a damn about the precise ins-and-outs of how that will be achieved, ending the wages system is what matters.  After that, it's up to free workers, who can co-operate to achieve their collective ends, to sort out the nimminy-pimminies.

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