Sunday 19 January 2014

Heterodox Economists on Postmodernism.

Yanis Varoufakis warned heterodox economists against Postmodernism: he wasn't alone. Many founders of the PAECON movement, representing a wide variety of perspectives, rejected PoMo.

Take, for instance, the exchange between John E. King (history of heterodox economic thought) and Paul Davidson (Post Keynesian macroeconomics) in the Post-Autistic Economics Review in 2004.

King started the debate with an article arguing for pluralism in economics (issue 23). King went to great lengths to distinguish the form of pluralism he supports and proposes, from the superficially similar postmodern pluralism (i.e. Feyerabend's "anything goes"), which he opposes:
"There is much to be said for tolerance of many and even antagonistic scientific research programmes within an academic discipline or university. But we should not tolerate the existence of inconsistent ideas within our own heads."
For King his brand of pluralism rules out "unqualified relativism, for one thing; logical incoherence, for another", which he correctly identifies with PoMo (i.e. the "inconsistent ideas within our own heads").

Speaking with evident approval of the institutional economist Geoffrey Hodgson, King adds: he "is the most outspoken in denying that 'anything goes' and the most sternly critical of postmodernist claims in this regard". (Emphasis mine)

Furthermore, King goes on to say of Sheila Dow (methodology, the history of economic thought, money, banking and regional finance) that she "has also defended the principle of consistency against its postmodernist and constructivist opponents. Thus she proposes that a clear distinction be drawn between 'pure' and 'modified' pluralism". (Emphasis mine)

In the following issue (i.e. issue 24) Davidson replied to King. Davidson has little to object on PoMo. In reality, Davidson seems to care little for PoMo: the word is mentioned only once in his response (in a quote verbatim from King's article!).

If King's stance on PoMo wasn't the issue of Davidson's response, what was it?  Simple: he does not like either flavour of pluralism (neither King's, nor the Feyerabend/PoMo "anything goes" one); Davidson does not accept pluralism. Period. It's hard to say why, but it seems that, to Davidson, pluralism itself smacks of PoMo and Davidson would have none of it. Instead, he subscribes to a Keynesian monism:
"If one wishes to explain (describe) the production, exchange and financial features and operations of a market-oriented, money using,  entrepreneurial economy, then Keynes's  'General Theory' is the sole 'correct' alternative to neoclassical economics. Neoclassical theory is … merely a 'special case' of his general theory. Moreover I would argue that … other heterodox theories … are other special cases …".
In Davidson's view, it would seem, you cannot be a Keynesian (or Post Keynesian, at any rate) and a PoMo at the same time. And, having to choose between being a Keynesian and being a PoMo, Davidson takes the former.


A little later, in issue 28 of Post-Autistic Economics Review, Geoffrey Hodgson himself expresses his own views on PoMo (and formalism in economics, another obsession among the PoMo/PoKe "in" crowd). The long quote is fully justified:
"It is also worth bearing in mind that there is an example of a social science in which formal methods and models have hitherto been put to little use, apart from statistics. Yet this discipline is widely acknowledged to be in a state of severe disorder, especially concerning its core presuppositions, its self-identity and boundaries, and its relations with other disciplines, particularly economics and biology. This afflicted social science is sociology. The persistence of its acute scientific maladies alongside its relatively infrequent use of formalism indicates that additional problems exist within the social sciences today. These include the postmodernist affirmation that one theory is as good as another, the frequent choice of a theory on ideological rather than scientific grounds, and an occasional self-inflicted blindness concerning the biological aspect of human nature and its significance for the study of human society". (Emphasis mine)
So, while Hodgson criticizes the hyper-formalisation of economics, his criticism is a moderate one: for him formalisation is not the problem, but a problem; for Hodgson, PoMo is among "the additional problems … within the social sciences today".

Another high-profile heterodox economist (one who seemingly criticizes mathematical formalism much more radically than Hodgson), Lars PĂ„lsson Syll (issue 55. RWER. PDF):
"One of the most important tasks of social sciences is to explain the events, processes, and structures that take place and act in society. In a time when scientific relativism (social constructivism, postmodernism, de-constructivism etc) is expanding, it's important to guard against reducing science to a pure discursive level". (Emphasis mine)
To add insult to injury, Syll not only singles PoMo out as something to guard against, but takes the defence of one of the PoMo favorite bugbears: believe it or not, the Enlightenment (curse its memory!): "We have to maintain the Enlightenment tradition of thinking of reality as principally independent of our views of it and of the main task of science as studying the structure of this reality". (Emphasis mine)


"Fine" -- the reader may say. "I get the idea: lots of heterodox economics big wigs don't like Postmodernism. Meh! Why should I care?".

In the next post or two in this series I intend to tell you why you should care.

Wednesday 15 January 2014

Australia Post: the Vultures are Circling.


When you read an article like Peter Martin's on Australia Post, you know the decision is already made and the debate is just a formality: people will lose their jobs, and nothing you say will make any difference.

To put it bluntly, the 33,000 Australia Post workers, 10,000 contractors and their respective families will soon be in deep shit, no matter what.

You see, Australia Post's financial position is nothing short of hopeless… Or that's what Martin suggests:
"Delivering mail used to make Australia Post money. It [Australia Post's regulated traditional mail business] now costs $150 million per year. The loss is on track to blow out to $1 billion, and then perhaps $2 billion, far exceeding the profits from delivering parcels and making the entire organisation an albatross around the taxpayers' necks."
As hard as I tried, I couldn't find those "blown out" figures in the 2012 Australia Post Annual Report (PDF), from where Martin supposedly sourced the information. Oh, well. Maybe I was unlucky.

Anyway, the effort wasn't all in vain. While searching for those wayward numbers, I however, did find other figures which Martin never mentioned. Trading revenue, for instance, rose by 2.8% since 2011 (in spite of the fall in mail volume), taking AustPost's after tax profit to $281.2 million (16.6% increase since 2011), of which it paid $213.7 million in dividends to AustPost's owner: the Commonwealth.

Australia Post CEO, Ahmed Fahour: "Overall, we achieved a satisfactory return on equity of 18.7% (up from 13.4% last year)".

Added to the $369.3 million AustPost paid in taxes, AustPost's contribution to the sacred federal budget "bottom line" is $583 million. Not bad for "an albatross around the taxpayers' necks", uh?

Unlike Martin claims, there seems to be little reason to believe the losses on the regulated business will ever wipe out the profits in the non-regulated business: "our non-regulated business returned a strong operating result of $545.6 million with parcels and retail services both performing well".


The point is, once the decision to throw someone into misery was made, you need only to rationalize it. But you do not rationalize your decision by presenting data against it, so you overlook a whole bunch of figures and see only a $150 million partial loss.

Or, following Martin, you argue that Australia Post workers need to be sacked now, because "by 2050 [in 35 years' time!] there will be just 1.5 [Aussies of working age, for each old-timer or kiddie]". You know, "Australia will need to make good use of every worker it has" and the best way of achieving that in the future is making workers redundant in the present.

Makes sense, right?

Credit Image:
[A] Raptor Watch. link

Saturday 4 January 2014

Varoufakis on Postmodernism.

or Why Critics of Economics Can Ill-Afford the "Postmodern Turn"

Yanis Varoufakis (Professor of Economic Theory at the University of Athens, and noted blogger) addressing in 2002 the then fledgling Post-Autistic Economics movement:
"It is a sad irony when the activities of dissidents help shore up the establishment they set out to subvert. The point of this piece is to warn the 'economic' dissident: Beware the Postmodern Turn! The argument will turn on the thought that postmodern criticisms of economics serve the twin purpose of (a) releasing pent-up frustration with the profession while, at once, (b) reinforcing its ideological backbone." (link)
I am sure those who have followed the output of online post-modern self-described Post-Keynesian macroeconomists (which one may, unfairly, consider representative of the PoKe collective) will find Varoufakis' article astoundingly accurate (I may have further to say on this subject in the future).

But here I wish to refer to something else. For all its merits, there is a glaring omission in Varoufakis' argument. This is curious, since he explicitly mentioned science and the postmodernist (PoMo, for short) views on it. Varoufakis left out the so-called Science Wars and perhaps its best known "battle": the Sokal Affair.

The debate between natural scientists, at one hand, and social science/humanities academics, at the other, is too lengthy to be dealt appropriately here. With the caveat that readers should exercise common sense when using Wikipedia, I'd recommend for the absolute newcomer its two related entries.

For my purposes, however, it will suffice here to show these two charts, courtesy of Google Books Ngram Viewer:

(right click to open a larger version in a separate tab)

The chart above shows how frequently the 2-word phrases "Sokal Affair" and "Social Text" (bigrams or 2-grams, in Google's terminology) have occurred in Google Books in American English, since 1975 and up to 2008 (apparently, the corpus does not include more recent books).

The publication of mathematics/physics professor Alan Sokal's prank article (delightfully titled "Transgressing the Boundaries: Towards a Transformative Hermeneutics of Quantum Gravity", link) in 1996 by one of the flagship PoMo academic journals, Social Text, occurred when the journal was gaining references, acceptance and influence in the literature.

Soon after publication, Sokal revealed through another journal (Lingua Franca) that the article was, in fact, a hoax:
"I decided to try a modest ... experiment: Would a leading North American journal of cultural studies ... publish an article liberally salted with nonsense if (a) it sounded good and (b) it flattered the editors' ideological preconceptions?"
Judging by the chart, Sokal's article seems to have caused little initial commotion; but as the controversy surrounding his naming and shaming of Social Text gained prominence both in academic and ordinary media (around 2000), the fortunes of Social Text changed: as of 2008, its influence was still heading south.

(right click to open a larger version in a separate tab)

The exact same phenomenon is, if anything, even more evident in the next chart, describing the broader PoMo "movement" (often seen as an umbrella term for post-structuralism, deconstructionism/deconstructivism and related "isms"): the whole PoMo bubble burst. POOF!

While it's hard to ascertain Prof. Alan Sokal's precise weight as causing agent (after all, with or without Sokal, the public was bound to eventually perceive PoMo for the sham it became), one must acknowledge his efforts and credit him for them.

As seen in the opening of this post, Varoufakis warned in 2002 heterodox economists against a "PoMo turn" because it would be theoretically counterproductive and self-defeating. Against the backdrop of the PoMo collapse, however, it's clear that it would be worse than that: it would be suicidal...

...and just plain dumb.

But dumbness has never stopped you, so, by all means, carry on.