Krugmania

I've been getting hot under the collar lately.

People got excited about Krugman's newsnight appearance. Fair enough. He's the Boss of economic commentators. But an economics discussion that folk were still tweeting about a week after it happened? Something is going on here. It's Krugmania.

Oh, if only politicians would listen to His wisdom. His modest ways, his stumbling speech. We trust him instinctively. He's John Peel's american cousin who got hooked on Keynes rather than the Cocteau Twins. He's a force for good against the evil of the right-wing, rent-seeking, profit obsessed, monied, warmongering, child-molesting, hamster-stamping, racist elite that conspire to make each of our lives miserable. Imagine if He was President of the World. Justice, peace and prosperity would be upon us and poverty would be history.

In case you're the one person who hasn't seen it, here's it is.



At 1:24 Jeremy makes me cringe. "I don't know why you're shaking your head." He says to Andrea Leadsom. "This is a Nobel prize winning economist!". Even John Moulton prostrates himself before the wisdom of the Krugman.

[Oh, by the way, the argument they're having is as follows. Krugman says the government should spend money to get out of recession, Moulton and Leadsom say they shouldn't.]

Anyway, I need to calm down.

And I need to say this plainly. It's not Krugman I'm annoyed with. It's You!

Have you ever seen the Life of Brian? Well, Krugman is Brian, a very naughty boy. And you lot are what propel him to the status of Messiah. Not helped of course by the twelve inch cock of a Nobel Prize that throbs in his pants. He doesn't have to get it out and slap it in our faces, he doesn't even have to allude to it. Just knowing it's there is more than enough. If you look closely enough at the video you'll see Paxman salivating at the thought of it. A man with a twelve inch cock. On My Show !

Let's forget the fact that Hayek and Friedman have got one too (a Nobel Prize that is - I'll let go of the cock metaphor now). Let's ignore the fact that they'd be saying something very different to Krugman. But please, please, let us remember Hayek's warning about the idea of a Nobel Prize in Economics*. Don't worry, no quote. Hayek's a dry old stick and doesn't deliver the snappiest of phrases. Just the title of his Prize Lecture - 'The Pretence of Knowledge'.

You can't blame Krugman for any of this. What's he to do? Refuse his Nobel Prize? Say no to the Newsnight interview because the debate won't be scientifically rigorous? He's doing his job, and doing it well. I like the cut of the man's jib. I was a bit disappointed with his response post newsnight. He claimed that his opponents in the arguments over austerity were just following a 'small government' (i.e. libertarian) agenda. I'm not saying he's right or wrong about it. There just seems little point in debating these things if you're only going to end up calling into question your opponent's motivations.

But then it's hard for Krugman. As the Blessed One, everyone wants to take a crack at him. There was a big row recently (less noticed by the mainstream media) between him and Steve Keen (who comes from a very different place to Moulton and Leadsom). Any Messiah is going to have his share of disaffected followers. If you're a wannabe messiah pitting yourself against the Blessed One is a great play. There's even an economic theory for it - it explains why the best place to set up a new shoe shop is next to an existing shoe shop. I've forgotten what its called and I don't want reminding, OK?

Of course sometimes things don't work out well for Messiahs. Especially when they claim they really are the son of God. Krugman has avoided this. In fact, when I first came across Krugman's writing as an undergraduate it was, in a sense, his humility that impressed me. He kept things simple. He wrote, as much as possible, in plain English. Said what he thought. You only have to read a few Economics blogs, a couple of newspaper articles to realise how easy most economists find it to speak in tongues. Those that don't succumb to this temptation should be cherished. Cherished, but not worshipped.

At the heart of all this there's a moral question. I think people fall in love with Krugman - I think there's Krugmania - because they like the answer he gives to that moral question. Some people are starving. "Then feed them", says Krugman. "We can grow more grain". What casts doubt in the mind of the farmers is that next year the harvest may fail, and their families may starve. If I were Krugman I'd be tempted to lead a quiet life, like most of the other Nobel Prize winning economists. I suspect that it's his believe in the rightness of his arguments and, even more so, in the righteousness of his answer to that moral question that drives him. But these are not exceptional characteristics.

No, as I said. The problem doesn't lie with Krugman, it lies with You. Or rather, it lies with Us. There's something in our social patterns that leads us to create the Messiahs. And usually it's around Money. Since civilisation began Money has remained an unresolvable puzzle - a paradox. So we look to prophets to guide us through it to the promised land - to the place where there is no longer distance between desire and satisfaction. But they're leading us blindly. And they'll have to take the blame when we get fed up of walking. Then we'll find a new Messiah.

"..money seems to be the most frequent and convenient axis on which millenarian movements turn."

Kenelm Burridge New Heaven, New Earth (1969) p.146

Can I suggest something then? Rather than Krugmania. Rather than elect Krugman as President of the World - or indeed a logical conclusion of the fetishism of the Nobel Prize would be to suggest that the Swedish Academy Of Sciences actually take over the global economy, after all they award the prizes. Rather than being propelled to walk on blindly by our belief in the possibility of economic paradise born of a technical expertise in the study of economics. Can we instead just stop a moment, and all think a little more deeply about money? After all, it seems quite important.

We could start for example by demanding that anyone who claims to be an economist tweet in 140 characters or less what they think money is (well, actually 127 characters or less once you includes the #whatismoney hashtag). It'd be lovely if other experts on Money - the ones that use it everyday (that is, all of us) - did the same. But economists particularly should be made to do it as an initiation into the Econ Tribe. Nail their colours to the mast, so to speak.

To start the ball rolling here's mine. 

"Money is to price, as gravity is to weight. #whatismoney"

I was going to go for something like, "Money is both the fundamental element and product of social reality. #whatismoney". But that's hardly plain speaking, is it? Neither would be saying that "Money is a commodity used to facilitate exchange", or "Money is a social relation expressed through exchange". I mean, tweet what you like, obviously, but I'm just trying to point out that explaining what you think money is, is no use if its meaning is buried too deeply.

Saying it simply is much more of a challenge. That would make a good Krugmantra.

One last thing. Don't start your tweet "Money is just...". If there's one thing we all know, it's that Money ain't just anything.

*The Nobel Prize in Economics was established in 1968 by the Swedish Central Bank. The other Nobel Prizes, like the one Einstein won, have been awarded since 1901.

Money Wisdom #41

"Many... philosophers... stayed out of politics, but nobody can stay out of the economy"

Richard Seaford Money and the Early Greek Mind 2004 p.184

Money Wisdom #40

" The law of gravity, for example, is perhaps the most ruthlessly static pattern of order in the universe. So, correspondingly, there is no single living thing that does not thumb its nose at that law day in and day out. One could almost define life as the organized disobedience of the law of gravity. One could show that the degree to which an organism disobeys this law is a measure of its degree of evolution. Thus, while the simple protozoa just barely get around on their cilia, earthworms manage to control their distance and direction, birds fly into the sky, and man goes all the way to the moon."

Robert Pirsig Lila 2006 (1991) p.155

A Review of Money and the Early Greek Mind by Richard Seaford

Seaford's language is difficult at times, in fact quite a lot of the time. He assumes his reader has a deep knowledge of Ancient Greek History - which I don't and was therefore often searching Wikipedia and the like to gain context. I also didn't like the structure of his book. And sometimes he said things that made me wonder if he's missed the point. There was a moment on page 112 when I was tempted to give up.

"As currency precious metal has advantages over iron. It is rarer and more valuable, and so can embody monetary value in pieces that are smaller and more easily concealable and portable than spits." (bold highlighting is my own)

So you may wonder why I've given it a full 5 stars? Because at its best it's brilliantly insightful; one of the most important books on the origin of money of recent times.

But first my criticisms. I can live with the first two. Both just required a bit more effort on my part. Besides, I guess the book was originally written for a readership of Greek Scholars and has garnered broader attention by being cited in writing on the origins of money (in particular Graeber's Debt - the first 5000 years). Regarding the quote; I see this as circular reasoning - isn't he just saying that a silver coin is valuable because its silver and not iron? I read the book as someone interested in Money rather than ancient Greece or the development of Philosophy, so I might be overly sensitive to this sort of thing. I was left asking if Seaford wants us to believe in a commodity theory of money - the rarity of silver? - or to believe in a social relations theory of money - the sharing of sacrifice? I'll happily dismiss both, or consider a conflation of the two, but Seaford should tell me from where he thinks money came. He does tell us at length what he thinks money is. And this leads me to the most serious criticism of this book; the structure of his argument.

Seaford defines money early in his book. Clearly he feels it is important to do so and later he criticises others who have been less rigorous in defining what they mean by money. In essence Seaford's definition is functional - money is, what money does. When he looks for examples of this money stuff  the reader is not surprised that he finds the first significant instances of it in Ancient Greece. If I defined music as having a 4/4 time signature with an accentuated backbeat, I would find music was born in 1950's America  in the form of rock n roll. In Seaford's defence he is only doing what many Anthropologists have done before. But for me his argument - that Greece is a special case because its coinage, its money, differentiates it from the Near Eastern civilisations - is undermined. Surely it would be possible to construct functionalist definitions of money to preclude or include any particular society or historical period? The discourse he cites between Polanyi & Veenhof being a case in point. In addition you have arguments - such as that presented by Joel Kaye in Economy and Nature in the Fourteenth Century - which make similar claims about the effects of monetisation, but in reference Medieval Philosophy (& proto-science) and its difference to Greek Philosophy.

Fortunately, almost inevitably, Seaford steps outside of these self imposed constraints. And then we move from a difficult book with a flawed thesis to a sublime work which offers deep insights into the nature of Money and its relationship to Mind. Just a few dozen pages after the frustration of the passage quoted above I was rewarded for my perseverance with Chapter Eight - The Features of Money. And it's here that Seaford really begins to hit his stride. The detail in the opening chapters is interesting - particularly on Laum's spits & sacrifice - but from Chapter Eight the quality of Seaford's insights into the nature of money begin to match his obvious mastery of Greek literature. He is clearly fascinated by money's metaphysical mystery - its impersonal/personal nature, its unlimitedness, the paradox of concrete abstractedness, and its simultaneous sameness and distinctiveness. It's a fascination that's infectious and it propelled me through the remainder of the book. At times I was reminded of Simmel's Philosophy of Money. There is more than a hint of psychoanalysis in Seaford examination, and I wanted more of this. His thoughts on these fuzzy ideas about money and their relation to the Greeks is what really made this book for me. (They also serve to highlight the limitations of a functionalist definition of Money)

Its a tough read - especially if you're not a Greek scholar. I've unintentionally spent more time criticising the book in this review than praising it. So I need to say this without equivocation; if you're interested in, or studying, the origins of money you must read this book. The rewards far exceed the (considerable) effort required. My wish is that Professor Seaford write a book for the general reader on Money and Midas. A freer reign on his thoughts and feelings about money combined with his knowledge and understanding of Greek mythology would make for a fascinating book on a myth that everyone knows.


This review appears on Amazon here. If you enjoyed my review please do give me a click on the YES button where it says 'Was this review helpful to you'.

Money Wisdom #39

"... It isn't Lila that has quality; it's Quality that has Lila. Nothing can have Quality. To have something is to possess it, and to possess something is to dominate it. Nothing dominates Quality. If there's domination and possession involved, it's Quality that dominates and possesses Lila. She's created by it."

Robert Pirsig Lila 2006 (1991) p.150

A Ramble on Value & Growth

I've been thinking about Quality & Value lately. Inevitable when you're reading Pirsig (ZenMM & Lila - I'm currently a few chapters into Lila). Today when selecting music to play whilst doing domestic duties I came across this:

Now, it's not bad. Obviously accomplished musicians, good voices etc. And the blonde lady is very attractive. But there seems a vast difference in Quality when you compare it to this.

There's nothing that really lends itself to objective measurement about why one is higher Quality than the other. It could be about an authentic connection to the song? Whatever, it's all subjective. And yet there it is. A feeling for me, at least, of a tangible difference in Quality. And weirdly, it's not even really in what you hear or see, it's just there in the moment. I could watch Candice Night all day long, and it wouldn't really matter if Ian Gillan had hit bum notes, the Deep Purple video would still be of much higher Quality. I'd even hazard a guess that everyone in the Blackmore's Night video would agree with this. Even Richie Blackmore, himself.

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I've mentioned in a previous post the connection I perceive between Pirsig's conception of Quality (or Value, if you prefer - Pirsig says they're the same thing) and my conception of Money. I wonder what the relationship is between the difference in Quality of these two videos and the increase in Value that we associate with economic growth - not in mundane sense (as in which one sold more t-shirts or recordings) but more in a metaphysical sense; what is the relationship between Quality in music and Growth.

I nearly considered this issue before in my dissertation (here's a revised more reader friendly version of it). But I chickened out that time - there's only the very slightest reference to it. Let me try to make the idea more explicit, now.

People get used to using and seeing the term Economic Growth - they see it as a pretty solid thing. A proxy for a change in our general sense of well being. Of course, it's not solid at all. GDP - the most common measure for economic growth - has been referred to as an empty abstraction by the Austrians. And those on the other side of the fence aren't too keen on it either. I remember TFP (Total Factor Productivity) being a popular alternative measure of growth when I was studying. But there's also HDI (Human Development Index), ISEW (Index of Sustainable Economic Welfare), and even GNH (Gross National Happiness). All of these try to measure something to do with the change in the Quality of our life.

It's important to remember that the measures aren't it. They're not actually the thing. They're a way of getting a handle on the thing. I thought music might provide a glimpse of the thing itself. A whisper of the truth that underlies this improving Quality that we experience as economic growth.

In my mind a new musical genre is an increase in Value - or more precisely, it is an expansion of our experience of Value. Recognising genres helped to put those changes in Value in a time frame which allowed me to look at what was happening in the market for music when a particular genre was born.

Of course, the harder you look for music genres the more of them appear. And consequently it becomes harder and harder to see their Value. The growth that seems so clear when you look at the development of Rock n Roll from its Folk and Blues roots is much harder to see in the development of Grindcore from Industrial Metal and Hardcore Punk. Although granted, proponents of Grindcore may argue otherwise.

I don't think I was successful in trying to expose the relationship of new genres to economic growth. Nevertheless, I still think it's there. I can still feel it. I still think I can sense it in the difference between two performances of the same song (as above). But I couldn't tell a believable story about it. I couldn't find a way round the problem of subjectivity vs objectivity. I've since discovered, of course, that Pirsig has a lot of interesting stuff to say about this.

So, this thing - this economic growth, money thing, quality, value whatever you want to call it - has been on my mind for a long while. And I do tend to see it wherever I look.

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I took the dog for a walk after I'd watched the music videos. It was a beautiful day. Sunny with a warm summer breeze. I stood on the top of a hill, on one side of a valley and looked down across a field of wheat. Still green. I could see it shimmer in the sun as the wind skipped across it. I watched waves ripple through the field as the wind blew down along the valley. It looked and sounded like the sea. Wheat needs wind. Too much can flatten it and in the commercial production of wheat wind is viewed as a bad thing. But without it wheat wouldn't exist. Nor would we, of course.

I imagined each sheaf of wheat as a person - in fact, as an economic agent - being tossed to and fro by the winds of economic change, striving to grow in the face of uncertainty. It seemed like a good analogy and I wondered how 'economist-wheat-sheaves' would explain it.

[ Now you may say that biological growth is very different from economic growth (or the increase in Value that I tried to explore through music genres). But I'm not so sure. Wheat grows in relation to its DNA, the resources of our planet, and *something else*. Its tempting to believe that science explains everything completely. But it doesn't. Even for something as simple as Wheat there are many mysteries. Depending on what you believe, that *something else* can be God's plan, a morphic field, or some other explanation for the unexplained. For me, that *something else* - the unexplained bit - has to do with Money, Value, or Quality - a type of resonance to which we and wheat seem connected (I'll admit, that does sound close to both the morphic and the godhead explanations). ]

Let me leave that there. So, the economist-wheat-sheaves.

When I look down from my privileged position on the hill, it's immediately apparent that economist-wheat-sheaves are subjective. They're are right down there amongst the rest of the wheat.

There'd still be a whole bunch of wheat that regarded the wind as divine. Not the economist-wheat-sheaves of course. The only belief common to them is that they're sheaves of science. The Wind is divine ! Pah ! Wind is made of Air. Therefore it is our actions upon the Air to which we must look to explain Wind. The origins of how the first Wind was invented are a bit of a mystery. But great wheat-sheaf-economists of the past had looked hard at this question, and decided it wasn't important.

Things had moved on. Theories had been worked out. Positions established.

The Austrian-Economist-Wheat-Sheaves (AEWS) see each sheaf bowing and bending according to its own will and in response to the actions of the sheaves around it. The air is neutral; wind is a result of the millions of tiny movements by individual sheaves. Hence wind is a resource limited by the bending and bowing, the whims and desires, of individual sheaves. Too much wind is just an indication that the sheaves should stiffen up, stop all this reckless movement before they fall over completely. It's unfortunate that some do fall flat but for air to be in equilibrium, actions must have consequences.

Modern-Monetary-Wheat-Sheaf-Theorists (MMWST) also see the wind as created by the movement of the sheaves themselves. They call it endogenous wind creation. But they wouldn't regard the air as neutral. If wind is created by the movement of the sheaves, then the air must be too. It's actually a lack of wind that causes sheaves to fall over. If the wind blows from the south they'd say, what we need to do is encourage more wind to blow from the north. To do this we must create more air. And air is really just still wind. So we can avoid sheaves being flattened by coordinating the efforts of all sheaves to make counter-veiling winds.

The Austrians would mock the Monetarists. They'd ask by what right do they seek to curb the liberty of each sheaf to bend and bow as it pleases. Coordination, they'd claim is just another word for slavery. The wind is theirs, individually. It was created by them individually and each individual is in the best position to know how to move. The Monetarists would call the Austrians cruel for ignoring the plight of those sheaves flattened by the wind. They'd say that the prospects for the field as a whole would be better served by the community of sheaves helping the individuals to bend and bow in the right way - to benefit all. The Austrians would be aghast. How do you know what is the right and what is the wrong way to move? they'd ask. If sheaves make mistakes in the way they move the wind punishes them. Its natural, they'd claim. Of course the Monetarists wouldn't see it like that at all. The 'natural' thing to do would be to help a neighbour in trouble.

In the middle of course would be the pragmatists. The Neo-Classical-Wheat-Sheaves (NCWS). Having identified AEWS and the MMWST as the outliers in the sheaves' dualist experience of the world, the NCWS would win over opinion with an appeal to monism and moderation. Forget the purity of thought of the outliers, they'd say, the world in which we wheat sheaves grow is not perfect. What we need is an explanation of events that is resilient enough to reassure us, yet flexible enough to adapt to circumstance. And so they'd say 'probably' and 'it's likely that' and 'on balance' and they'd get lots of letters after their names. One or two would be awarded the Nabisco international 'Prize in Economic Sciences'. The highest honour accorded to any wheat-sheaf-economist. The general populous of sheaves would hear their reasonable tone, be impressed with their credentials, and generally be too busy swaying and frowing in the wind to worry too much about the theories of the economist-wheat-sheaves. So the outliers would be dismissed by most of the wheat sheaves. Only when a storm hits would they think about the wind again, for a moment. Then when a still day came once more, they would just bask in the sunshine and grow.

From up here on the hill though, you can see that they're all wrong. You can see how the wind flows over and through the wheat. And that although each sheaf does move like its neighbours, the wind is really what moves them all. It's a force they cannot control. It's not of their making. Rather, it has made them.

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I go back to those wheat fields often. In a few weeks I'll be there and I'll no longer be able to see even the tip of the dog's tail wagging as she chases the birds who hover above the fields. The wheat will have grown tall and turned to gold. 

I was reading something the other day that suggested that surplus wheat was our first real commodity. That it was instrumental in our creation of the idea of debt and credit - and so, of course in the birth of money. I'm not convinced of that, myself. I think that's a bit like thinking that we make the wind, and that air is just still wind.

Pirsig's way of expressing 'science fact' is illuminating. This is how I think he'd express the 'facts' about wind using his Metaphysics of Quality:

The air in a high pressure area values movement towards a low pressure area.

Anyway this has been a long and random ramble through Value and Growth. I was intending to take a look at uncertainty along the way and then stop off at morality. Remembering of course that economics itself was born as a 'Moral Science'. But I've gone far enough already. Morality is a tricky one anyway.

Sweet child in time, you'll see the line.
The line that's drawn between good and bad.

Blackmore, Gillan, Glover, Lord, Paice Child in Time (1970)

Money Wisdom #38

"In the Metaphysics of Quality 'causation' is a metaphysical term that can be replaced by 'value'. To say that 'A causes B' or to say that 'B values the precondition A' is to say the same thing. The difference is one of words only. Instead of saying 'A magnet causes iron filings to move towards it', you can say 'Iron filings value movement towards a magnet'. Scientifically speaking neither statement is more true than the other."

Robert Pirsig Lila 2006 (1991) p.112

Money Wisdom #37

"A coin, like a human being, is the material embodiment of an invisible essence (value, the soul) present also in other coins or human beings. And just as the individual unitary human soul may seem self enclosed, separate from the social process by which it is in fact formed, so the coin may seem to enclose within itself the unitary invisible value that in fact depends entirely on circulation."

Richard Seaford Money and the Early Greek Mind 2004 p.298

Money Wisdom #36

"Monetisation is the centralisation of social power in a single, abstract, impersonal entity."

Richard Seaford Money and the Early Greek Mind 2004 p.293

Money Wisdom #35

"Money (especially as coinage) tends to promote an indefinite network of indiscriminate exchange that transcends the defined personal relationships to be found within in the family, within various social groupings, or within networks of gift-giving and barter. Whereas the Homeric gift is invested with the personality of its heroic donor, the only kind of person that money resembles is the prostitute. For Shakespeare it is 'the common whore of mankind'. The prostitute, like money, is impersonally promiscuous, transcending the restricted sexual relations required for the reproduction of the household."

Richard Seaford Money and the Early Greek Mind 2004 p.156