Posts Tagged ‘ How the economy works ’

Framing the Twentieth Century

Today, I got an email from Jeremy Adelman, who teaches an excellent MOOC on world history at Princeton.

The MOOCs are changing the landscape of higher education. It is here that the dominant institutions are staking their ground. The History department at Princeton is saying to every other history department in the entire world “Beat this, if you can!” Princeton is not interested in making money – but in achieving dominance – the same motivation that is behind Amazon and Google.

This is from today’s email to its students:

We are now turning to the twentieth century in this course.  Finally.  I know that many of you have been waiting patiently to get to more recent developments.  It is important, however, to dwell on more distant times; they give us perspective on our age, the age of people we have known, our great-grandparents, our grandparents, and our parents – even some of us!  Specifically, we reached back to the 14th century for two reasons.  The first, is to recover the multiple roads that globalization has taken.  The institutions, the actors, the technologies, and the ideologies of integration and disintegration have varied.  Why is this important?  Because it reminds us – and it has been said by a great historian, Eric Hobsbawm, that the role of the historian is to remind societies of things they would rather forget – that our globalization is just one more experiment among many.  There is little that is natural or predestined about it; globalization has taken many forms and scales.

The second reason we go so far back is to explore the making of the concepts and categories that shape the way we understand our world.  In some respects our history of the world in this course is also a history of concepts that have made our world a world – like the idea of universal rights, notions of discovery, divisions of labor, scientific knowledge, and concepts of “others,” have all come from global interactions.  We need to understand where these ideas came from if we are to understand our age as the product of history.  As we will see, the twentieth century was a clashing of these contradictory motives and understandings.  It helps to know where they came from.

This week’s lectures leave us in 1914.  The long processes unleashed by the age of revolutions, of national integrations, free trade, new forms of capital flow and accelerated migration, came to a climax – and a collision!  How?  Explaining this requires understanding what was happening globally.  Accordingly, this week’s lectures look more closely at how people began to think about land in deeply cultural ways, with profound environmental effects of the enclosure of the world (lecture 15); we also look at the discontents and troubles brewing simultaneously around the world on the eve of the First World War (lecture 16).

Playing With Other People’s Money

This is the latest game in town – played most successfully by the global Financial Industry – or the Banks.

But in Costa Rica – and probably everywhere in the undeveloped world (where there are few regulations) – it is also used in Real Estate. The money in this case is Real Estate (which is always owned by somebody) – and the idea is to make as many lucrative trades as possible – while hiding the details under the table.

For example, a certain informant notified a Real Estate agent that an attractive property was available at a very reasonable price. The informant and the agent agree to double the price – and a corporation owned by the agent obtained control of the property – I am not sure of the legal procedure here, but that’s what it amounted to.

They lucked out and found a buyer, an American couple, who fell in love with the views from the property (it was on the top of a mountain) and bought it. They then discovered that the road to the property was impassible after a rain – which meant for practical purposes it was useless. They realized they had made a mistake – and soon after returned to the States and got a divorce.  That was round number one.

Then another Real Estate agent (the woods are full of them down here) heard that the Power company was spending a lot of money improving the road to the property because it used the same road. This second agent realized that this made the Gringo’s property valuable – and she set out to get it – by pestering the wife with emails. The wife was relieved to get rid of it, and flew down to Costa Rica, at her expense – to sign the papers. The details of the transaction were hidden from me, but I think she agree to make some small monthly payments. I am also sure she never made them.

Now she is stuck with the property – which she feels is valuable – but can’t figure out how to turn this value into money. The property is fast returning to a jungle, so she spends her spare time on it with a weed eater (with a metal blade) cutting down the brush herself – because she can’t afford to hire someone else to do it.

I’m not sure of the moral here – but it might be – “Stupidity doesn’t pay!”

The Wrong Side of a One-Way Mirror

Scientific American usually has a pro-business stance (think of all those wonderful advertisements) but once in a while something sneaks in that is good for the rest of us.

Take the article A Tale of Two Internets by Michael Fertik on page 13 of the February Issue. It is not available online. Here is the opening paragraph:

Imagine an Internet where unseen hands curate your entire experience. Where third parties predetermine the news, products, and prices you see – even the people you meet. A world where you think you are making the choices, but in reality, your options are narrowed and refined until you are left with merely the illusion of control.

He goes on to explain what Big Data is.

Many companies (and the NSF) are finding out everything about you. And using this information to personalize your Internet experience. This sounds innocuous enough – the Internet shows you only what you what you are interested in. But these guys can also show you only what they want you to be interested in.

And you have no way of seeing them do this behind their (not your) one-way mirror.

The Inner and Outer Self

The human situation is complicated, we can all agree on that. But in the last 500 years or so it has become much more complicated. But we cannot agree on that. Why? That is the subject of this posting.

Every organism is part of something much larger. All life is closely related – we are all built of cells, which are much the same the world over. Except for one kind of cells – nerves, which in the human brain have become incredibly complicated.

Actually, the right world to use here is not complicated, but complex. And complexity theory tells us something amazing – as systems become more complex new behaviors appear – out of nowhere. These are called emergent properties.

The human brain is full of these properties – as is human behavior, which is derived, somehow, from our over-developed brains. I want to talk about two of them – the inner self and the way we have become extended – the external self.

We have always been part of our technologies – this is what civilization amounted to: a complex of new technologies – including writing. And they have never been under control – we become whatever our technologies want us to become.

You may object that technologies do not have minds, and cannot will anything. You are right, technically. But practically, the combination of technology and people always results in people modifying their behavior to make maximum use of the newest, most successful, technology. This is what makes a technology successful.

This is most easily seen in warfare – a very human activity. A man with a spear is much more powerful than a man without one. And a phalanx of men armed with spears is more powerful yet. In such a situation the individual man disappears – and only the group remains. A transformation many find hard to resist.

This is the basis of the individual – group conflict. Which is usually resolved to benefit the group.

Modern history began with the Middle Ages – from which it emerged. Modernism was an incredibly complicated (or actually, complex) development – that people are now ignorant of – as they are of most everything. This posting is about how modern history evolved into post-modern history. Another very complicated development – which I can only scratch the surface of.

The big change involved the creation of mass production and mass man. This was a very clever idea – although not a new one. The Greeks had pottery factories operated by slaves, and hundreds of thousand of their pots still exist.

But the Industrial Revolution had something new – energy from fossil fuels – first coal, and then oil. And an explosion of new machines. This, as always, made a new kind of people – the human mass. Here again, this was nothing new. Ancient Rome was full of useless people who demanded bread and circuses – and got them.

But their modern counterpart was different – they could be put to work in the factories, manufacturing mass-produced commodities – at very low prices – to the immense profit of a few. This became know as Capitalism – whose most obvious feature was its ruthlessness.

But this is not what I started to write about. Completely unnoticed, something else was happening – people were extending themselves outward and becoming part of their technologies – which were themselves becoming more and more extended. As I said, this very important development has not been noticed – except for a few, and these have been ignored.

People could not resist this shameful new development – and they didn’t want anyone calling their attention to it. What was shameful about it? It meant they were abandoning their inner selves – which, after all, were their real selves.

Now I must start of the development of today’s subject – the difference between the inner and outer self. The outer self is all our possessions – which possess us. In the Computer world, this means we are networked all over the place. The Economy is also networked, which in practice means it can be manipulated by a few to their benefit. But this is nothing compared to the damage to our inner selves.

Every person, in the course of his (or her) normal development, develops his own personality. In Jungian terms, this is called individuation. And every individual is different. And is accepted as being different. In my little town in Costa Rica I can see this just by walking down the street, and taking note of the people there.

By contrast, if I go a two hour bus ride away to the Central Metropolitan Area (where most of the people live and most of the jobs are) the people have become homogenized – where everyone is much the same. And where everyone studiously ignores this.

I summarize – when people develop in externalized self, they lose their inner self. And cease to function as normal human beings.

You might ask “If you are right, why hasn’t this been noticed?” The answer seems to be “This is normal human behavior (which made it invisible to us) – but carried to extremes – which produced effects that we could not have anticipated.”

Of course, you will ask “What’s the solution?” My answer is “I don’t know, but the first step would be recognizing where we are – which seems impossible.”

Reconciling Capitalism and Democracy

Foreign Affairs keeps showing up in my inbox – and I keep ignoring it. But today I paid $2.95  for the article Making Modernity Work, and downloaded it. As I expected, it provided a self-serving history of the Modern world, intended to keep the world of business in power indefinitely. These intellectuals are apologists for that power structure – and I am sure they are well-paid to do so.

I will not attempt to refute their arguments, that would only be a waste of my time and yours. I will only copy this excerpt:

Few “classic” liberals insist that the State should play no role in the economy, and few serious conservatives, at least in England and on the Continent, believe that the Welfare State is “the road to serfdom.” In the Western world, therefore, there is today a rough consensus among intellectuals on political issues: the acceptance of a Welfare State; the desirability of decentralized power;a system of mixed economy and of political pluralism.

The author is carefully ignoring a basic fact – that Americans do not accept this consensus at all – they believe just the opposite. They are not interested in reconciling anything – and reject anything intellectual out-of-hand.

On its home page,  it reviews the book Rule and Ruin about the American Republicans. Europe is aware of America – and doesn’t like it.

However, if you are interested, here is the link to How We Got Here: the Rise of the Modern Order. There is some good stuff here – but if you are like me, you are skeptical about the present system, and see it was a vast failure instead.

How Capitalism Kills Companies – Felix Salmon: How Capitalism Kills Companies

This yet another article about Romney and his lies. People get upset so easily now, you would expect them to upset about this. But, strangely enough, this doesn’t seem to bother them. What gives?

As I keep saying, this is another example of unconscious behavior, where you have to make an educated guess about what is really going on under the hood.

My guess is that people are saying to themselves “So he lies, what’s so unusual about that? It’s a normal part of business (to say nothing of politics), and everybody does it. He might make a good president.”

The Slump Goes On: Why?

I got a report card today from WordPress today, about my blog’s performance last year. The most popular posting for the whole year was Excellent Analysis of the Financial Crisis. The link here was an article in the New York Review The Slump Goes On: Why?

I went back and read it again. It made me rethink my opinions of Ben Bernanke. He is a banker all right, but he is capable (or at least was capable) of criticizing the industry.

It really is a good article, you might want to read it too. Things are not as simple as we like to think – and the global economy is a case in point.

The second-most popular posting was John Dewey: The Lost Individual. I just looked it over again, and I was impressed too.