Astral Codex Ten

Adam Smith

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Adam Smith

Article

Adam Smith is a recurring person in the Astral Codex Ten archive, appearing 8 times across 8 issues between April 16, 2021 and August 11, 2023. The archive places it in contexts such as “The Labor Theory of Value which originated with Adam Smith”; “He quotes Adam Smith, agreeing with him thus far”; “David Friedman: no, Adam Smith didn’t share all of your modern progressive opinions”. It most often appears alongside India, China, effective altruism.

Metadata

  • Category: People
  • Mention count: 8
  • Issue count: 8
  • First seen: April 16, 2021
  • Last seen: August 11, 2023

Appears In

Source Context

Recovered passages from the original issue text. When the raw archive preserved outbound links inside the source passage, they are listed directly under the quote.

Your Book Review: Progress And Poverty
April 16, 2021 · Original source
Although 2021 seems better than 1879 in absolute material terms, George's complaint still rings true: healthcare and higher education are increasingly unaffordable, inequality is as bad as it ever was, and The Rent Is Too Damn High. And even if all of these measures had improved as well, we still have to contend with a fundamental complaint: how can human civilization have piled up an amount of wealth best described as absolutely banana pants insane, and yetstill have poverty, oppression and cyclical recessions? Yes, greed, evil, and human nature will always be with us, but isn't it weird that we haven't eliminated these economic problems the same way we've eliminated Smallpox, Scurvy, and having to write your scathing polemics about Thomas Jefferson by candlelight with a goose feather? Giving the mic back to George, he closes the chapter with this haunting quote, first written 142 years ago: If there is less deep poverty in San Fran Francisco than in New York, is it not because San Francisco is yet behind new York in all that both cities are striving for? When San Francisco reaches the point where New York now is, who can doubt that there will also be ragged and barefooted children on her streets? I'll just leave this here: Number of Homeless Children in U.S. At All-Time High; California Among Worst States. I. Wages and Capital George insists sloppy terminology leads to sloppy thinking. Naturally, he spends an entire chapter beating words to death to correct this. The Meaning of the Terms Let's start with Wealth. The common usage, both then and now, is "anything with an exchange value." George doesn't like how this mixes dissimilar things. By George, what is wealth? Wealth is produced when Nature's bounty is touched by human labor resulting in a tangible product that is the object of human desire. Labor is required, but the amount and type doesn't matter - George offers the example of simply picking a berry off a bush as an act that transforms nature's gifts into human wealth. Note particularly that human desire is an important requirement of wealth; it doesn't matter how much work someone put into something, if it doesn't gratify human needs or desires in some way, it's not wealth. Speaking of human desire, let's talk about Value. Where does a thing's value come from? The prevailing theory of the day was the Labor Theory of Value which originated with Adam Smith and David Ricardo, which says that Labor is the source of value. The early formulations were a bit ambiguous, here's Smith in Wealth of Nations for instance: The value of any commodity ... is equal to the quantity of labor which it enables him to purchase or command. Labor, therefore, is the real measure of the exchangeable value of all commodities. So... is a thing's value how much labor it takes to make the thing, or how much labor someone's willing to exchange for the thing? Nowadays Labor Theory of Value is most commonly associated with Marx. Marx picks a lane and says the value of something is tied to the amount of "socially necessary labor" required to produce it. George goes the other way: It is never the amount of labor that has been exerted in bringing a thing into being that determines its value, but always the amount of labor that will be rendered in exchange for it. - Henry George, The Science of Political Economy, p. 253 In other words, "a thing's value is whatever someone is willing to pay for it." This is in line with the so-called marginal revolution (the movement, not the blog) and modern theories of value. Labor Labor is the exertion of human beings. It's possible to labor to no avail (try punching a concrete wall), but typically humans labor towards an end, such as gaining wealth. But whether or not we accomplish anything with our efforts, George calls them labor. Labor isn't just making things, by the way – it's also moving or exchanging them. Production Production is labor applied "to the production of wealth." You know, productively. This is all human exertion that isn't punching a concrete wall and rewards you for your efforts with something that fits the definition of wealth. Said wealth is the "product of labor." Wages whatever is received as the result or reward of exertion is "wages." No distinction here is made between blue-collar work and white-collar work – whether one is called "hourly pay" and the other is called "annual salary," George calls them both "wages." It doesn't matter whether you receive them from your boss, from customers, or from nature. If you do work and get something from it, you have received "wages." With those basics under our belt, let's circle back to Wealth: What are some examples of wealth? By George, Gold is wealth. Teddy bears are wealth. Tesla roadsters and candy canes and young adult vampire romance novels are wealth. The same goes for fish you've caught, deer you've hunted, and cool looking rocks you've picked up on your morning walk. The value of these things may differ, but as long as they're tangible, originate in nature, someone ever did a lick of work to make or acquire them, and a human being somewhere desires them for any reason, they're wealth. It gets a little clearer when we ask what isn't wealth. And by George, Money isn't wealth. Articles of gold are wealth because they're tangible things that have been dug up, crafted, and fulfill certain human desires. But paper currency, digital currencies, and other things that aren't inherently valuable but merely represent value are not wealth (outside of putting their physical articles in coin collections or making paper airplanes, and so forth). Now don't get the man wrong, these things are certainly valuable. They're just not wealth. They are certificates that represent claims on wealth. For any computer programmers in the audience, money is a pointer to wealth. Likewise Stocks and Bonds and other financial instruments are not wealth. These are also just claims on wealth. A creditor's title to Debt isn't wealth, either, it's just a claim on the debtor's (typically future) wealth. And, writing as he was not long after the Civil War, George points out that Slaves are not wealth either but, represent "merely the power of one class to appropriate the earnings of another class." Wealth, thus defined, is the terminal "ground truth" bits of the economy, and all the financial layers on top are fancy IOUs that just encode various claims on it. George offers a thought experiment to test if something is wealth: if you produce a pile of gold, fish, or Lego bricks, you've clearly increased the amount of wealth in the world. But if you produce a giant pile of IOUs that just records who owns what and who owes what to whom, it doesn't matter how many of them you pile up or how long the chains of ownership get, you still haven't increased the amount of real wealth in the world. Again, this isn't saying the IOUs aren't valuable, they are. But they're only valuable because they ultimately point to real wealth. If you magically transported everyone over to a hypothetical Earth 2, carrying over all of Earth 1's money and financial instruments but none of Earth 1's tangible wealth, the value of all those IOUs would instantly evaporate. Now what about digital goods? Leaving things like Bitcoin aside for the moment, let's consider the case of a digital image file: By George, this is wealth. Digital though it may be, it's physically encoded on a storage device somewhere, and is thus tangible (it's not a pure abstract concept flitting about in Platonic heaven) and has its origins in nature. Human exertion built the computer that encodes it, and clicking the button that saves it to disk or displays it on your screen is labor. Finally, it directly satisfies human desires (mine, at the very least). It's value may be negligible, but it's wealth. By contrast, the digital bit sitting in some database that says I own a particular eBook or mp3 is just a digital IOU – a claim on the wealth that are the physical bits on my local storage device or remote server that digitally encodes the files. The fact that digital files don't seem particularly physical, and that they can be trivially and endlessly copied, doesn't mean that Henry George, magically transported to today, wouldn't regard them as wealth. Okay, so is there anything else that's not wealth? By George, Bitcoin isn't wealth, in case you were wondering. It's just a (very fancy) financial instrument, a digital claim on wealth. And that goes for most crypto assets – a token on some blockchain that says I own a painting by Banksy is just another IOU, regardless of the technical sophistication of its distributed trustless ledger. What about intellectual property? Copyrights, patents, and trademarks are all different forms of Monopoly – the exclusive, government-granted legal right to do a particular thing (publish a certain book, manufacture a certain product, use a certain name in business, etc). The exclusive right to do or produce a thing, valuable as it may be, is not the thing itself. By George, Monopoly is not wealth. But there is something big that is wealth – the C-word. Capital. By George, Capital is "wealth devoted to procuring more wealth", and it's the next thing he insists everyone is hopelessly confused about. He quotes Adam Smith, agreeing with him thus far: That part of a man's stock which he expects to afford him revenue is called his capital. ...and also gives us a short etymology lesson on the origin of the term: The word capital, as philologists trace it, comes down to us from a time when wealth was estimated in cattle, and a man's income depended upon the number of head he could keep for their increase. ("Per capita" being the Latin for "by head") By George, all capital is wealth, but not all wealth is capital. George notes capital is often described as being "stored up labor", and endorses this view – but what it really means, is capital is stored up production. It's not literally the labor that's stored up but the wealth generated by it, set aside and then dedicated to the purpose of getting more wealth. George insists that it is the owner's intention that transforms wealth into capital. If you buy an old factory to throw parties in for your hipster friends, it's just wealth. But the minute you decide to put it to work to make something useful (or start charging your hipster friends a cover charge at the door), it becomes capital. George therefore further insists that a laborer's daily bread and the clothes on their back do not count as capital, because a person has to eat and wear clothes whether they work or not. The laborer's tools (and arguably their steel-toed work boots) can however be counted as capital, because their purpose is to assist the laborer in getting more wealth by working for wages, and the laborer wouldn't acquire, use, and maintain those things otherwise. George has more exclusions: We must exclude from the category of capital everything that may be included either as land or labor. Human exertion (labor) by itself can never be capital. The products of human labor become capital when they are stored up and set to the purpose of getting more wealth. To muddle this distinction defeats the point of having separate terms for those things at all, and prevents us from reasoning meaningfully about how they relate to one another. Labor is not capital, and neither is labor by itself wealth, it produces wealth – and if it ain't wealth, it ain't capital. And that brings us to land. Land, land, land. By George, land is not wealth. And it's definitely not capital. The unique specialness of land is George's entire schtick and the very core of his philosophy. The term land embraces, in short, all natural materials, forces, and opportunities That means that a field or a meadow is "land", as is a mountain. But so are the fish in the sea, the clouds in the sky, veins of gold in the earth's crust, and the oil deep under ground. These things aren't yet wealth – not until human beings both a) desire them and b) touch them with labor. So... land is not wealth. But... how come? I mean, look: land is tangible, it "comes from nature", humans are always productively applying their labor to it, and it certainly seems capable of gratifying human desires. George sees this reasoning as understandable, but insists it's the root mistake that leads other political economists astray – because for George, land just is nature itself. Come again? Land is the ultimate source of all wealth, but it's most useful to think of it as a generator, acompletely separate entity from the wealth that human labor and desire draws from it. Players of Magic: the Gathering and Settlers of Catan should already have a solid grasp of this distinction: In modern times, George would grant electromagnetic spectrum and orbital real estate for satellites the same status of "land" that already applies to farmland and terrestrial real estate. We don't even need to speculate about whether he'd attach this status to sunlight because he straight-up predicted solar power: Even the lack of rain which makes some parts of the globe useless to man, may, if invention ever succeeds in directly utilizing the power of the sun's rays, be found to be especially advantageous for certain parts of production. (That's from Protection or Free Trade, footnote 19) The important thing to grasp about land is that it comes before everything humans do or make, and is itself a thing no human can make. Okay, smarty-pants, what about the Netherlands? They've been making land for centuries! Well, land in the Georgist sense doesn't refer simply to "dry land", but also the sea bed, the oceans, and the skies above. The "new land" in the Netherlands counts as an improvement to land that already existed. The seabed was always there, but by filling it in so you can walk around on it, now it's more useful to us (George has a lot to say about improvements to land, which we'll get to later). Okay, what is land not? nothing that is freely supplied by nature can be properly classed as capital By George, land is not wealth. And since it's not wealth, it's not capital. Okay, we get it. Land is very special to Mr. George and we must never put it in the same category as wealth, labor, capital, wages, production, money, or anything else. Why exactly is this so damn important? Well, by George, if you treat land the same way you would a bar of pig iron, an hour of work, or a dollar bill, before you know it you'll get poverty paradoxically advancing alongside progress, inexplicable bouts of industrial depression, literal genocides and holocausts (he's dead serious about this), and The Rent Being Too Damn High. With terminology now firmly established, George moves on to the relationship between wages and capital. 3-for-1 special on Wages, Capital, and Labor I'm condensing three chapters here because they all deal with the same basic thing. The question George wants to answer is: Why, in spite of increase in productive power, do wages tend to a minimum which will give but a bare living? The conventional wisdom of George's time is that wages are governed by a fixed ratio between the number of laborers and the amount of capital devoted to their employment, because "the increase in the number of laborers tends naturally to follow and overtake any increase in capital." So it doesn't matter how much capital you throw at employing workers, it'll just attract even more workers splitting it up, so although wages might temporarily wiggle a bit in the long term they'll always settle back to a "natural" minimum. (As we'll see in the next section, this argument stems from Malthusianism). George spends some time methodically poking holes in the theory (it's predictions don't line up with the facts he observes), and then sets out to prove his replacement theory (emphases mine): wages, instead of being drawn from capital, are in reality drawn from the product of the labor for which they are paid. He pulls a G.K. Chesterton to make his point: During the time [the laborer] is earning the wages he is advancing capital to his employer, but at no time, unless wages are paid before work is done, is the employer advancing capital to him. He starts by identifying the source of confusion: Because wages are generally paid in money, and in many of the operations of production are paid before the product is fully completed, or can be utilized, it is inferred that wages are drawn from pre-existing capital I mean, the old theory seems sensible: the employer has capital and uses it to pay wages. But however you slice it, capital's investment gets paid back by production when it takes its cut, so does it even make a difference to talk about where wages are "drawn" from? Value goes out, value comes in, isn't it all a wash? By George, it isn't: in the old theory, because capital "must come first", it follows that "industry is limited by capital - that capital must be accumulated before labor is employed", which leads to a reductio ad absurdum – We are told that capital is stored-up or accumulated labor – "that part of wealth which is saved to assist future production." If we substitute for the word "capital" this definition of the word, the proposition carries its own refutation, for that labor cannot be employed until the results of labor are saved becomes too absurd for discussion. George anticipates the following rejoinder – Well, when we say 'labor is paid out of capital' we don't mean it as an absolute statement for all stages of human development (or else we have a chicken-and-the-egg problem and civilization could never have begun), we just mean it applies to, say, every civilization that's left the stone age. George will have none of it and spends three entire chapters relentlessly beating to death the idea that wages are drawn from capital instead of from production. He starts with the simple case where wages are paid in the form of direct, concrete wealth, then moves on to the more complex case where people are paid in money and other instruments. Laboring for wages: Imagine a fishing village where nobody cooperates – each person digs their own bait and catches their own fish. Then they discover labor specialization and realize they can catch more fish together if one specializes in digging and the other in catching. So the digger digs, the catcher catches, and they share the fish. The digger really contributes as much to the catch as the one who physically pulls the fish off the hook even though the digger never directly "caught" a fish, and the fish he gets for his work is directly paid out of his contribution to the total production. Later, our fisherfolk invent canoes, and one stays home making and repairing canoes. This increases the haul of the digger and catcher, and the canoe-er gets paid out of her contribution to the increased production. And so it goes as society continues to advance. The work the specialist puts in causes more fish to be caught, and that person's wages is drawn from the growing pile of fish. As George puts it: "Earning is making." George gives another example: If I take a piece of leather and work it up into a pair of shoes, the shoes are my wages – the reward of my exertion. Surely they are not drawn from capital – either my capital or any one else's capital – but are brought into existence by the labor of which they become the wages; and in obtaining this pair of shoes as the wages of my labor, capital is not even momentarily lessened one iota... As my labor goes on, value is steadily added, until, when my labor results in the finished shoes, I have my capital plus the difference in value between the material and the shoes. And another: If I hire a man to gather eggs, to pick berries, or to make shoes, paying him from the eggs, the berries, or the shoes that his labor secures, there can be no question that the source of the wages is the labor for which they are paid. George goes on to say it doesn't matter if you're paid in money or directly in wealth, because the money is a direct claim on the underlying wealth. It also doesn't matter if you get paid on commission. Imagine a whaling ship where each crewman gets paid a share out of whatever the ship catches. When the ship sails back into port with a hold full of whale oil and bone, the crew gets paid in money, the owner simultaneously adds to his capital oil and bone. The crew's money directly represents their share of the concrete wealth that is the oil and bone. The owner's capital hasn't decreased, and the workers drew their wages directly from the production. So let's get to the point, Mr. George – wages aren't drawn from capital but instead from production. Great, let's grant that – so what? George hammers away at this because thinking wages are drawn from capital leads to a false conclusion, namely that "labor cannot exert its productive power unless supplied by capital with maintenance." "Maintenance?" Well, workers need food and clothing and they get paid by their employers, so you could imagine capital as a limiting factor on labor. But by George, food and clothing isn't capital, it's just wealth, as we said before. And with regard to wages, the point is that the employer always gets "paid" first, because the second the laborer produces value, the employer's capital increases: As in the exchange of labor for wages the employer always gets the capital created by the labor before he pays out capital in the wages, at what point is his capital lessened even temporarily? Okay, but what if I'm just a terrible businessman and I pay somebody $500 an hour to smash Ming vases, then sell the fragments as aggregate to a construction crew for a few pennies a pound, all at a tremendous loss? Surely then the laborer's wages must be drawn from my capital, because there's not enough productive value generated by the labor to draw them from! George says okay, sure, but only because I'm an idiot and will soon be out of business: Yet, unless the new value created by the labor is less than the wages paid, which can be only an exceptional case, the capital which he had before in money he now has in goods – it has been changed in form, but not lessened. Fair enough, Mr. George, but what if I'm building some enormously expensive multi-decade project, like a dam or a nuclear power plant or a cathedral? The kind of thing we call a "capital-intensive" project? What do you have to say to that? George points out that as laborers labor, they progressively add value to whatever they're producing. Take the case of a shipwright building ships for an employer – even if the boss can't sell a half-finished ship, it still holds value (for one, it costs less to finish a half-finished ship then no ship at all). And with every stroke of the laborer's work, the employer who owns the shipyard gets an incremental increase in his stock of capital. It is not the last blow, any more than the first blow, that creates the value of the finished product – the creation of value is continuous, it immediately results from the exertion of labor. A pedant would point out that the "last hit" that finishes the product which makes it ready for market adds disproportionate value, but George's point is just to establish that value is continuously created, and doesn't magically come into being allat once right at the end. George further points out that if you look at things like agriculture you'll see the market directly acknowledging his theory: As a plowed field will bring more than an unplowed field, or a field that has been sown more than one merely plowed... It is tangible in the case of orchards and vineyards which, though not yet in bearing, bring prices proportionate to their age. George freely admits that capital can be required for certain kinds of work, but he disagrees with what its purpose is. It's not a pool that wages get paid out of. He goes on for another chapter on "The Maintenance of Laborers Not Drawn From Capital" but I think we can safely skip it and move on. TL:DR – George hammers to absolute death the idea that Laborers derive their own maintenance (food/shelter/clothing/etc) from their wages, with George insisting it is drawn from production and... you guessed it, not from capital. At least some of George's ideas will not seem so radical to modern readers (especially those already critical of capitalism or neoclassical economics), but it's important to understand that at the time almost everything he was saying was considered deeply radical and shocking. Capital was the fundamental driving force of the economy and labor was utterly dependent on it, and the Malthusian theory of overpopulation was the accepted explanation for why wages were low and workers were starving. Political Cartoon literally demonizing Henry George – Puck magazine Oct. 20, 1886 The Real Functions of Capital Okay, Mr. George. You've spent three whole chapters beating me over the head with what the functions of capital aren't. So what are the functions of capital? Capital "increases the power of labor to produce wealth." How? By enabling labor to apply itself more effectively (power tools go brrrr)
Inline links: absolutely banana pants insane, Number of Homeless Children in U.S. At All-Time High; California Among Worst States, Labor Theory of Value, marginal revolution, blog, https://substackcdn.com/image/fetch/$s_!szbX!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F02e3f9db-5fe4-4a1b-bd19-5a13bac84aa1_500x500.png, https://substackcdn.com/image/fetch/$s_!cDFG!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F28ef979e-83da-4d1b-8d81-5f08fd6103a5_516x600.png, https://substackcdn.com/image/fetch/$s_!PVE6!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F68f4f7f0-2016-4fe9-9996-879a3c92db74_516x600.png, Protection or Free Trade, https://substackcdn.com/image/fetch/$s_!aeD5!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F348d4d74-8c98-42e6-b5f7-7bd79b30a816_960x611.png
By George, this is wealth. Digital though it may be, it's physically encoded on a storage device somewhere, and is thus tangible (it's not a pure abstract concept flitting about in Platonic heaven) and has its origins in nature. Human exertion built the computer that encodes it, and clicking the button that saves it to disk or displays it on your screen is labor. Finally, it directly satisfies human desires (mine, at the very least). It's value may be negligible, but it's wealth. By contrast, the digital bit sitting in some database that says I own a particular eBook or mp3 is just a digital IOU – a claim on the wealth that are the physical bits on my local storage device or remote server that digitally encodes the files. The fact that digital files don't seem particularly physical, and that they can be trivially and endlessly copied, doesn't mean that Henry George, magically transported to today, wouldn't regard them as wealth. Okay, so is there anything else that's not wealth? By George, Bitcoin isn't wealth, in case you were wondering. It's just a (very fancy) financial instrument, a digital claim on wealth. And that goes for most crypto assets – a token on some blockchain that says I own a painting by Banksy is just another IOU, regardless of the technical sophistication of its distributed trustless ledger. What about intellectual property? Copyrights, patents, and trademarks are all different forms of Monopoly – the exclusive, government-granted legal right to do a particular thing (publish a certain book, manufacture a certain product, use a certain name in business, etc). The exclusive right to do or produce a thing, valuable as it may be, is not the thing itself. By George, Monopoly is not wealth. But there is something big that is wealth – the C-word. Capital. By George, Capital is "wealth devoted to procuring more wealth", and it's the next thing he insists everyone is hopelessly confused about. He quotes Adam Smith, agreeing with him thus far: That part of a man's stock which he expects to afford him revenue is called his capital. ...and also gives us a short etymology lesson on the origin of the term: The word capital, as philologists trace it, comes down to us from a time when wealth was estimated in cattle, and a man's income depended upon the number of head he could keep for their increase. ("Per capita" being the Latin for "by head") By George, all capital is wealth, but not all wealth is capital. George notes capital is often described as being "stored up labor", and endorses this view – but what it really means, is capital is stored up production. It's not literally the labor that's stored up but the wealth generated by it, set aside and then dedicated to the purpose of getting more wealth. George insists that it is the owner's intention that transforms wealth into capital. If you buy an old factory to throw parties in for your hipster friends, it's just wealth. But the minute you decide to put it to work to make something useful (or start charging your hipster friends a cover charge at the door), it becomes capital. George therefore further insists that a laborer's daily bread and the clothes on their back do not count as capital, because a person has to eat and wear clothes whether they work or not. The laborer's tools (and arguably their steel-toed work boots) can however be counted as capital, because their purpose is to assist the laborer in getting more wealth by working for wages, and the laborer wouldn't acquire, use, and maintain those things otherwise. George has more exclusions: We must exclude from the category of capital everything that may be included either as land or labor. Human exertion (labor) by itself can never be capital. The products of human labor become capital when they are stored up and set to the purpose of getting more wealth. To muddle this distinction defeats the point of having separate terms for those things at all, and prevents us from reasoning meaningfully about how they relate to one another. Labor is not capital, and neither is labor by itself wealth, it produces wealth – and if it ain't wealth, it ain't capital. And that brings us to land. Land, land, land. By George, land is not wealth. And it's definitely not capital. The unique specialness of land is George's entire schtick and the very core of his philosophy. The term land embraces, in short, all natural materials, forces, and opportunities That means that a field or a meadow is "land", as is a mountain. But so are the fish in the sea, the clouds in the sky, veins of gold in the earth's crust, and the oil deep under ground. These things aren't yet wealth – not until human beings both a) desire them and b) touch them with labor. So... land is not wealth. But... how come? I mean, look: land is tangible, it "comes from nature", humans are always productively applying their labor to it, and it certainly seems capable of gratifying human desires. George sees this reasoning as understandable, but insists it's the root mistake that leads other political economists astray – because for George, land just is nature itself. Come again? Land is the ultimate source of all wealth, but it's most useful to think of it as a generator, acompletely separate entity from the wealth that human labor and desire draws from it. Players of Magic: the Gathering and Settlers of Catan should already have a solid grasp of this distinction: In modern times, George would grant electromagnetic spectrum and orbital real estate for satellites the same status of "land" that already applies to farmland and terrestrial real estate. We don't even need to speculate about whether he'd attach this status to sunlight because he straight-up predicted solar power: Even the lack of rain which makes some parts of the globe useless to man, may, if invention ever succeeds in directly utilizing the power of the sun's rays, be found to be especially advantageous for certain parts of production. (That's from Protection or Free Trade, footnote 19) The important thing to grasp about land is that it comes before everything humans do or make, and is itself a thing no human can make. Okay, smarty-pants, what about the Netherlands? They've been making land for centuries! Well, land in the Georgist sense doesn't refer simply to "dry land", but also the sea bed, the oceans, and the skies above. The "new land" in the Netherlands counts as an improvement to land that already existed. The seabed was always there, but by filling it in so you can walk around on it, now it's more useful to us (George has a lot to say about improvements to land, which we'll get to later). Okay, what is land not? nothing that is freely supplied by nature can be properly classed as capital By George, land is not wealth. And since it's not wealth, it's not capital. Okay, we get it. Land is very special to Mr. George and we must never put it in the same category as wealth, labor, capital, wages, production, money, or anything else. Why exactly is this so damn important? Well, by George, if you treat land the same way you would a bar of pig iron, an hour of work, or a dollar bill, before you know it you'll get poverty paradoxically advancing alongside progress, inexplicable bouts of industrial depression, literal genocides and holocausts (he's dead serious about this), and The Rent Being Too Damn High. With terminology now firmly established, George moves on to the relationship between wages and capital. 3-for-1 special on Wages, Capital, and Labor I'm condensing three chapters here because they all deal with the same basic thing. The question George wants to answer is: Why, in spite of increase in productive power, do wages tend to a minimum which will give but a bare living? The conventional wisdom of George's time is that wages are governed by a fixed ratio between the number of laborers and the amount of capital devoted to their employment, because "the increase in the number of laborers tends naturally to follow and overtake any increase in capital." So it doesn't matter how much capital you throw at employing workers, it'll just attract even more workers splitting it up, so although wages might temporarily wiggle a bit in the long term they'll always settle back to a "natural" minimum. (As we'll see in the next section, this argument stems from Malthusianism). George spends some time methodically poking holes in the theory (it's predictions don't line up with the facts he observes), and then sets out to prove his replacement theory (emphases mine): wages, instead of being drawn from capital, are in reality drawn from the product of the labor for which they are paid. He pulls a G.K. Chesterton to make his point: During the time [the laborer] is earning the wages he is advancing capital to his employer, but at no time, unless wages are paid before work is done, is the employer advancing capital to him. He starts by identifying the source of confusion: Because wages are generally paid in money, and in many of the operations of production are paid before the product is fully completed, or can be utilized, it is inferred that wages are drawn from pre-existing capital I mean, the old theory seems sensible: the employer has capital and uses it to pay wages. But however you slice it, capital's investment gets paid back by production when it takes its cut, so does it even make a difference to talk about where wages are "drawn" from? Value goes out, value comes in, isn't it all a wash? By George, it isn't: in the old theory, because capital "must come first", it follows that "industry is limited by capital - that capital must be accumulated before labor is employed", which leads to a reductio ad absurdum – We are told that capital is stored-up or accumulated labor – "that part of wealth which is saved to assist future production." If we substitute for the word "capital" this definition of the word, the proposition carries its own refutation, for that labor cannot be employed until the results of labor are saved becomes too absurd for discussion. George anticipates the following rejoinder – Well, when we say 'labor is paid out of capital' we don't mean it as an absolute statement for all stages of human development (or else we have a chicken-and-the-egg problem and civilization could never have begun), we just mean it applies to, say, every civilization that's left the stone age. George will have none of it and spends three entire chapters relentlessly beating to death the idea that wages are drawn from capital instead of from production. He starts with the simple case where wages are paid in the form of direct, concrete wealth, then moves on to the more complex case where people are paid in money and other instruments. Laboring for wages: Imagine a fishing village where nobody cooperates – each person digs their own bait and catches their own fish. Then they discover labor specialization and realize they can catch more fish together if one specializes in digging and the other in catching. So the digger digs, the catcher catches, and they share the fish. The digger really contributes as much to the catch as the one who physically pulls the fish off the hook even though the digger never directly "caught" a fish, and the fish he gets for his work is directly paid out of his contribution to the total production. Later, our fisherfolk invent canoes, and one stays home making and repairing canoes. This increases the haul of the digger and catcher, and the canoe-er gets paid out of her contribution to the increased production. And so it goes as society continues to advance. The work the specialist puts in causes more fish to be caught, and that person's wages is drawn from the growing pile of fish. As George puts it: "Earning is making." George gives another example: If I take a piece of leather and work it up into a pair of shoes, the shoes are my wages – the reward of my exertion. Surely they are not drawn from capital – either my capital or any one else's capital – but are brought into existence by the labor of which they become the wages; and in obtaining this pair of shoes as the wages of my labor, capital is not even momentarily lessened one iota... As my labor goes on, value is steadily added, until, when my labor results in the finished shoes, I have my capital plus the difference in value between the material and the shoes. And another: If I hire a man to gather eggs, to pick berries, or to make shoes, paying him from the eggs, the berries, or the shoes that his labor secures, there can be no question that the source of the wages is the labor for which they are paid. George goes on to say it doesn't matter if you're paid in money or directly in wealth, because the money is a direct claim on the underlying wealth. It also doesn't matter if you get paid on commission. Imagine a whaling ship where each crewman gets paid a share out of whatever the ship catches. When the ship sails back into port with a hold full of whale oil and bone, the crew gets paid in money, the owner simultaneously adds to his capital oil and bone. The crew's money directly represents their share of the concrete wealth that is the oil and bone. The owner's capital hasn't decreased, and the workers drew their wages directly from the production. So let's get to the point, Mr. George – wages aren't drawn from capital but instead from production. Great, let's grant that – so what? George hammers away at this because thinking wages are drawn from capital leads to a false conclusion, namely that "labor cannot exert its productive power unless supplied by capital with maintenance." "Maintenance?" Well, workers need food and clothing and they get paid by their employers, so you could imagine capital as a limiting factor on labor. But by George, food and clothing isn't capital, it's just wealth, as we said before. And with regard to wages, the point is that the employer always gets "paid" first, because the second the laborer produces value, the employer's capital increases: As in the exchange of labor for wages the employer always gets the capital created by the labor before he pays out capital in the wages, at what point is his capital lessened even temporarily? Okay, but what if I'm just a terrible businessman and I pay somebody $500 an hour to smash Ming vases, then sell the fragments as aggregate to a construction crew for a few pennies a pound, all at a tremendous loss? Surely then the laborer's wages must be drawn from my capital, because there's not enough productive value generated by the labor to draw them from! George says okay, sure, but only because I'm an idiot and will soon be out of business: Yet, unless the new value created by the labor is less than the wages paid, which can be only an exceptional case, the capital which he had before in money he now has in goods – it has been changed in form, but not lessened. Fair enough, Mr. George, but what if I'm building some enormously expensive multi-decade project, like a dam or a nuclear power plant or a cathedral? The kind of thing we call a "capital-intensive" project? What do you have to say to that? George points out that as laborers labor, they progressively add value to whatever they're producing. Take the case of a shipwright building ships for an employer – even if the boss can't sell a half-finished ship, it still holds value (for one, it costs less to finish a half-finished ship then no ship at all). And with every stroke of the laborer's work, the employer who owns the shipyard gets an incremental increase in his stock of capital. It is not the last blow, any more than the first blow, that creates the value of the finished product – the creation of value is continuous, it immediately results from the exertion of labor. A pedant would point out that the "last hit" that finishes the product which makes it ready for market adds disproportionate value, but George's point is just to establish that value is continuously created, and doesn't magically come into being allat once right at the end. George further points out that if you look at things like agriculture you'll see the market directly acknowledging his theory: As a plowed field will bring more than an unplowed field, or a field that has been sown more than one merely plowed... It is tangible in the case of orchards and vineyards which, though not yet in bearing, bring prices proportionate to their age. George freely admits that capital can be required for certain kinds of work, but he disagrees with what its purpose is. It's not a pool that wages get paid out of. He goes on for another chapter on "The Maintenance of Laborers Not Drawn From Capital" but I think we can safely skip it and move on. TL:DR – George hammers to absolute death the idea that Laborers derive their own maintenance (food/shelter/clothing/etc) from their wages, with George insisting it is drawn from production and... you guessed it, not from capital. At least some of George's ideas will not seem so radical to modern readers (especially those already critical of capitalism or neoclassical economics), but it's important to understand that at the time almost everything he was saying was considered deeply radical and shocking. Capital was the fundamental driving force of the economy and labor was utterly dependent on it, and the Malthusian theory of overpopulation was the accepted explanation for why wages were low and workers were starving. Political Cartoon literally demonizing Henry George – Puck magazine Oct. 20, 1886 The Real Functions of Capital Okay, Mr. George. You've spent three whole chapters beating me over the head with what the functions of capital aren't. So what are the functions of capital? Capital "increases the power of labor to produce wealth." How? By enabling labor to apply itself more effectively (power tools go brrrr)
Inline links: https://substackcdn.com/image/fetch/$s_!cDFG!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F28ef979e-83da-4d1b-8d81-5f08fd6103a5_516x600.png, https://substackcdn.com/image/fetch/$s_!PVE6!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F68f4f7f0-2016-4fe9-9996-879a3c92db74_516x600.png, Protection or Free Trade, https://substackcdn.com/image/fetch/$s_!aeD5!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F348d4d74-8c98-42e6-b5f7-7bd79b30a816_960x611.png
By making possible the division & specialization of labor (you dig bait, I'll catch fish) Capital is a force multiplier that supercharges the productive power of labor. It doesn't supply labor with raw materials (nature does), nor does it provide for the maintenance of workers (who eat bread by the sweat of their own brow). George says this is why capital isn't a limit on industry. ...okay, George grants that capital may limit the form of industry. You can't plow without a plow or milk without a cow. George also grants that the lack of specialized tools can greatly limit productivity because you don't get the benefit of the force-multiplying effect of capital. Um... aren't you contradicting yourself here, Mr. George? You spent all this time hammering home your doctrine of wages to prove that capital doesn't limit industry, but you just said its absence can limit both the form and the productivity of labor! Time to unpack what we mean by "limit" and be super clear about it from now on: But to say that capital may limit the form of industry or the productiveness of industry is a very different thing from saying that capital limits industry. Okay, what do you mean? For the dictum of the current political economy that "capital limits industry," means not that capital limits the form of labor or the productiveness of labor, but that it limits the exertion of labor. Okay, I think I see what he's saying. The existing school of thought says that because capital provides labor with both materials and maintenance, therefore if capital dries up, labor productivity must go down because workers will have nothing to work on, and nothing to eat or wear. Labor is thus "limited" by capital, for without it is literally and metaphorically starved for capital. But George says no – the only way capital actually "limits" productivity in real life is in the degrees by which it force-multiplies labor's productivity and unlocks certain forms of labor in the tech tree. The kind of "limit" George objects to is the idea that you need capital just to get any work done at all, or that without capital to sustain it, labor will shrivel up. Instead, capital is rocket fuel that labor supplies to itself by investing a portion of its wages. And yet, with all the awesome slots we've unlocked on the tech tree, and barrels and barrels of rocket fuel to fire up eager laborers, we still find our economy sinking into mysterious depressions. Something is gumming up the works, but it's not a simple scarcity of capital: the real limitation is not the want of capital, but the want of its proper distribution Or as G.K. Chesterton said, "Too much capitalism does not mean too many capitalists, but too few capitalists." This might seem like a pedantic distinction – misallocated capital could be said to be "scarce" capital – but they're not the same thing at all. As Francis Bacon said in 1625: Riches were like [Manure]: When it lay, upon an heape, it gave but a stench, and ill odour; but when it was spread upon the ground, then it was cause of much fruit. Because the prevailing theories of George's time are based on incorrect ideas about the relation between wages and capital, "all remedies, whether proposed by professors of political economy or workingmen, which look to the alleviation of poverty either by the increase of capital or the restriction of the number of laborers or the efficiency of their work, must be condemned." In short, more investment, more protectionism, and more efficiency programs can't, won't, and haven't fixed poverty and industrial depressions because they all proceed from false premises. Having finally beaten the nexus of wages, capital, and labor into a bloody pulp, George turns his eyes towards another leading theory for why everything is terrible: the specter of overpopulation. II. Population and Subsistence The entire second book might as well be titled "Why Malthus is Dumb and Wrong and Bad." It's dedicated to dunking on Malthusianism, a philosophy that ascribes economic crises to the exponential growth of the human population, which must necessarily end in catastrophe. according to Malthusian theory, poverty appears as increase in population necessitates the more minute division of subsistence. George attacks Malthusian ideas not just because they're wrong, but because they make it easier to accept the prevailing theory of wages (as more capital is allocated, laborers will keep popping up like weeds to gobble it up, so wages must eternally stagnate). George draws a straight line between these faulty ideas and holocausts and genocides – specifically citing how colonial oppression in China, India, and Ireland were explicitly justified on Malthusian grounds. One million people died in the English-engineered Irish potato famine alone, and when you add in those who fled the entire population declined by 25% percent. And this isn't a tenuous link either – George directly connects the completely avoidable famine to his favorite bugbear, private landownership and extortionate rent. Given that Malthusianism is now widely discredited I'm just going to skip this chapter, but if you want to hear George in all his righteous fury, check out Appendix A (there's a link that returns here at the end): Appendix A: George Dunks on Malthusianism III. The Laws of Distribution When society produces wealth, who gets different shares of it, and why? Let's start by beating some words to death. By George, we're told that there are three factors in production: Land, Labor, and Capital. For each of these terms there must be a "law of distribution" that explains how each gets compensated for its part in production. The reward you get from production by owning Land is called Rent. The reward you get from production by supplying Labor is called Wages. The reward you get from production by supplying Capital is called ... um, what? We're looking for a term that clearly expresses the return to capital alone and nothing else. The closest thing we have is Interest, and that's probably good enough. George gives the common definition of interest as "the return for the use of capital, exclusive of any labor in its use or management, and exclusive of any risk, except such as may be involved in the security." This is pretty close to what we want – something that expresses the sole return to capital without mixing in anything else. But ... what about Profits? Profits is "almost synonymous" with revenue, assuming you have some left after you deduct expenses. It means a gain in money or wealth, but the trouble is this gain is a mix of rent, wages, and "compensations for the risk peculiar to the various uses of capital." What we want is a term that means the return to capital alone, totally separate from the return to laborers and landowners. To talk about the distribution of wealth into rent, wages, and profits is like talking of the division of mankind into men, women, and human beings. George spends a few pages talking about how everyone from Adam Smith on down got confused about this (spoiler: it's tied up with thinking wages are drawn from capital), before presenting his model for how it all works. If you want to see him knock that stuff down, see Appendix B (there's a link that returns here at the end): Appendix B: George dunks on the Conventional Laws of Distribution Here's George's model for how it all works: Land is"all natural opportunities or forces" and its return is rent Labor is "all human exertion" and its return is wages Capital is"all wealth used to produce more wealth" and its return is interest George says the false assumption at the root of the old theories is in thinking of "capital as the prime factor in production, land as its instrument, and labor as its agent or tool." George makes the following assertions: "Labor can be exerted only upon land"
Inline links: Francis Bacon said in 1625, Malthusianism, English-engineered Irish potato famine, Appendix A: George Dunks on Malthusianism, Appendix B: George dunks on the Conventional Laws of Distribution
Links For July
July 23, 2021 · Original source
17: David Friedman: no, Adam Smith didn’t share all of your modern progressive opinions. Probably people are just getting him confused with someone who did, like Jesus.
Inline links: no, Adam Smith didn’t share all of your modern progressive opinions.
Your Book Review: The Righteous Mind
July 15, 2022 · Original source
I find it ironic that liberals generally embrace Darwin and reject “intelligent design” as the explanation for design and adaptation in the natural world, but they don’t embrace Adam Smith as the explanation for design and adaptation in the economic world. They sometimes prefer the “intelligent design” of socialist economies, which often ends in disaster from a utilitarian point of view.
The Question Of Separatism
May 19, 2023 · Original source
This book is Jacobs’s least read. It was published in 1980, right after the first referendum where Quebecers voted to remain a part of Canada. It is based on lectures that Jacobs (who was an American but had moved to Canada in 1968) gave in Toronto right before the referendum. It’s not hard to guess why the book didn’t have a huge (read: any) impact. First, most people outside Quebec or Canada don’t have any reason to care. Second, the essay — which was written in English — argues in favor of the secession of Quebec, which virtually no one among the English-speaking population of Canada agreed with. The natural reaction from Canada’s intelligentsia was to ignore the book altogether. Meanwhile, few people in Quebec itself read it, since the referendum was over; it wasn’t even translated into French until decades later. As a result, The Question of Separatism sits awkwardly in Jane Jacobs’s bibliography, as if it were “a mistake in an otherwise brilliant career,” like I read somewhere. In a 2005 interview, one year before her death, Jacobs said that no journalist ever asked her about it. But the book was not a mistake. I don’t claim any special insight here: Jane Jacobs herself said so in that same interview. She said that she would have written the same book in 2005, “because that’s the way it is in the world, and it still holds.” Besides, The Question of Separatism is in fact not that much about the specifics of Quebec’s political situation, but rather about interesting generalities: what size means for countries and organizations, and why the fate of nations depends primarily on what happens in their cities. Taken together with Cities and the Wealth of Nations, which Jacobs wrote a few years later to expand on those ideas, we get a coherent and deeply interesting philosophy of economics: one that favors the local scale, cities and small countries, antifragility long before Nassim Taleb coined the term, and avoiding grandstanding theories that always fail to take into account the real complexity of the world. I. A Fake Mystery Cities and the Wealth of Nations opens on an economic mystery. “For a little while in the middle of this century,” writes Jacobs, “it seemed that the wild, intractable, dismal science of economics had yielded up something we all want: instructions for getting or keeping prosperity.” This was the 1940s to 1960s, and economists thought they had it all figured out. It was the golden age of high modernism and scientific technocracy. Everywhere from China to the Soviet Union to the United States and Britain and the nascent European Economic Community, leaders were coming up with elaborate plans, rooted in macroeconomic theories, that were supposed to guarantee future wealth and avoid economic crises. The theories had been developed by many thinkers over the previous two hundred years: Richard Cantillon, Adam Smith, John Stuart Mill, Karl Marx, John Maynard Keynes. Jacobs explains how they each had their own ideas of how the economy worked, disagreeing over things like whether supply or demand was the main driving mechanism, but they all agreed on a fundamental fact: inflation and unemployment have an inverse relationship to each other, like a seesaw. High inflation comes with low unemployment; high unemployment comes with low inflation, or even deflation when prices drop. The Great Depression, a time of deflation, had provided proof of the seesaw. Big government projects, as prescribed by Keynesians, were a way for states to reduce unemployment and bring the seesaw back in a balanced state. Economists developed fancy models, based on historical data, to predict the behavior of the economy. The Phillips curve in particular became popular. It was the golden age of technocracy; it was the triumph of high modernism. From now on wealth was assured, because we weren’t blind anymore: we had the curves. And yet — by the 1970s and 1980s, when Jane Jacobs was writing, the theories all stopped working. There was high inflation and high unemployment. People called it stagflation. Keynesian advisers in various governments were devastated: either their ideas were wrong, or they were applying them wrong. Economists such as Milton Friedman, from a rival school of economists called the monetarists or the Chicago school, came to the rescue — but their remedy, Jacobs believes, only made things worse. Whatever governments did to increase employment made inflation worse; whatever they did to attenuate inflation killed employment. The seesaw from the theories was working in application, even though it didn’t explain reality anymore. Stagflation was not supposed to exist, so stagflation could not be fought. At this point we’re near the end of Chapter 1, the densest part of the book. Jacobs has artfully guided us along economic history and laid out the mystery for us. What’s going on? we wonder. How are we supposed to deal with the two-headed monster of stagflation, if all economists are stumped? Then Jacobs, in a masterstroke, flips the whole thing over. I was impressed enough that I would have inserted a spoiler alert here, if it didn’t feel so silly putting a spoiler alert in an essay on economics. Stagflation is not a strange monster from legend. It is, Jacobs says, just the normal state of everything. Backward economies are in fact constantly in a state of stagflation. The prices in a poor country like Portugal or India (her two examples) feel low for an American or Canadian, but they’re high for most Portuguese or Indian people. At the same time, Portugal and India provide too few jobs to their residents. Inflation and unemployment are both perennially high, and none of that feels surprising whatsoever. Stagflation, in short, is just good ol’ poverty. All these fancy economists, from Cantillon in 1700s France to Keynes and Friedman in the 20th century Anglosphere, were thinking and writing about unusual places: rich countries that were undergoing fast economic development. They were making the classic mistake of treating poverty as a mystery and wealth as a given, when in fact poverty is the normal order of things and wealth, when it does occur, is what warrants an explanation. The result is that we don’t really know how to fix the economy of poor countries, nor do we know how to deal with decline in rich countries, whether we call it stagflation or something else. Jacobs derives from this a pretty damning view of macroeconomics. It is to her a science that has failed again and again, each time engulfing the equivalent of billions of dollars in wasted wealth. “We must,” she writes at the close of Chapter 1, “find more realistic and fruitful lines of observation and thought than we have tried to use so far. It is bootless to choose among existing schools of thought. We are on our own.” Fortunately, she has some ideas. II. Nations and the Wealth of Cities The original sin of macroeconomics, Jacobs believe, is to treat sovereign countries, or nations, as the main unit of economic analysis. This error, she claims, goes back to mercantilism, one of the first formal economic policies. Oversimplified, mercantilism states that wealth is synonymous with the amount of gold and silver in a nation’s treasury. This makes nations the main unit of economic analysis by definition. It’s a tautology — and one that was somehow embedded so deep in economic thinking that even the non-mercantilist Adam Smith would eventually choose, for his masterpiece of economic theory, the title An Inquiry into the Nature and Causes of the Wealth of Nations. Today, even though mercantilism has long been obsolete, we perpetuate the same tautology whenever we talk of the Gross Domestic Product or look at the very nice charts from Our World in Data, which for the most part allow only one level of resolution: sovereign countries. Of course, nations are an economically important concept because of that one property: they are sovereign, and therefore they write laws and implement policies that affect the economy. These policies can be productively compared. But that’s about it — for everything else, nations aren’t the right way to think about wealth. One reason is simply that they’re very different from one another: “it affronts common sense,” Jacobs writes, “to think of units as disparate as, say, Singapore and the United States, or Ecuador and the Soviet Union, or the Netherlands and Canada, as economic common denominators.” I would add that countries are arbitrary and changing: when the Soviet Union was replaced by 15 sovereign countries, the economic reality didn’t suddenly reshape itself to match the new borders. Lastly, nations contain, under the hood, many sub-economies that are also highly different from one another. None of that is secret or forbidden knowledge. Everyone has always been aware that New York City, or Milan, are economically very different from rural Mississippi or Sicily. But I find that it’s far easier to think in terms of “the United States” or “Italy,” especially when you’re not from there. Nations are an abstraction of real-life complexity, and are accordingly very tempting to use. Also, they’re often the entities that collect statistics, which is another difficult-to-resist temptation for anyone who likes quantitative data. Cities as Radiators of Economic Forces If nations aren’t the best unit to analyze the economy, what is? This is a Jane Jacobs book, so the answer is obviously going to be cities. Jacobs doesn’t actually give a clear argument why. Maybe that was in her previous book, The Economy of Cities. So far as I can see, her reasoning is, ironically, a bit tautological: “all developing economic life depends on city economies; it depends on them by definition because, wherever economic life is developing, the very process itself creates cities and has probably always done so.” But so far as I can see, this reasoning is correct. Cities concentrate people, and therefore economic life, and therefore economic power. The driving force for all this is a phenomenon that, from what I gather, was discovered by Jacobs when she wrote The Economy of Cities: import replacement. Consider, say, Boston back when it was a tiny settlement, not yet a city, in colonial times. At first, Boston didn’t produce much, especially not much that would be of interest to its main trading partner, London. It exported some natural resources: timber, fish. Whatever else the Bostonians needed, they needed to import it from other cities, again mostly London. (Remember to think of imports and exports in terms of cities, not nations.) For instance, at first, all metal tools in Boston came from European cities, and were paid for by the revenue from selling the timber and fish. Then, one day, some Bostonians decided to build an ironworks and make metal tools themselves. (Pictured: a reconstruction of the Saugus Iron Works, established 1646.) This wasn’t of any interest to London or other European cities. The Bostonians weren’t nearly as good or efficient at making metal tools as Londonians were. So Boston couldn’t export the metal tools back to Europe — but it could use them internally, and also export them to other American cities that were about as poor as Boston was, or poorer. Internally, this meant the spark of a manufacturing economy in Boston, as easily obtained metal parts made it easier for other Bostonians to replace other imports from European cities, and eventually develop a symbiotic network of industries. It also meant that the revenue from fish and timber could be used to import new things, including new innovations from European cities (which would later become opportunities for more import replacement). And because there were customers for Boston-made metal goods in New York and Philadelphia, and eventually Cincinnati and Chicago and Pittsburgh as these cities came into existence, it meant additional revenue for Boston that it could reinvest into developing its production further. For Jacobs, virtually all city development can be seen through the lens of import replacement (which, to be clear, has approximately nothing to do with policies of import substitution industrialization; import replacement is not a policy, but a naturally arising free market phenomenon). Her book contains many other examples than Boston, such as Venice, which started off in the early Middle Ages as a small town that sold salt to Constantinople, but then diversified its production to become one of the wealthiest cities of its time; or Taipei and Kaohsiung, two cities in Taiwan that kickstarted their development not long before the 1980s, by forcing expropriated landlords to invest into local import-replacing businesses. One is reminded of Scott’s review of How Asia Works. Import replacement, then, is what makes cities economically powerful. And this power is so great that it causes ripples in distant places. In fact it is the main reason that anything happens at all in non-city areas. Jacobs gives the example of Bardou, a small village in southern France. Bardou looks like this: To the extent that Bardou ever had an economic life, that life was almost entirely driven by distant cities. In ancient times, the area was populated because of iron mines nearby. The mines were exploited to serve the needs of people in the distant cities of Lugdunum (Lyon), Nemausus (Nîmes), or even Rome. As Jacobs notes, we could say that the mines served “the Roman Empire,” but that would be another example of using the abstraction of sovereign countries when we should instead be specific. It was Lugdunum, Nemausus and Rome that wanted the iron — not some random rural area of the empire, and certainly not the part of the empire in which Bardou was located. Eventually the mines and the region were abandoned. More than 1,000 years later, peasants moved into the area and built the modern village. For centuries they lived a wretchedly poor life of subsistence farming. No cities exerted any influence on it, and indeed nothing happened. Then, in the 19th century, the people of Bardou learned that they could improve their situation by moving to distant cities such as Paris, and most of them did. Again, the force wasn’t being exerted by “France”; Bardou was already part of France. The force was specifically being exerted by Paris and other cities with jobs for poor peasants. By the 1960s, only one old man was left. That’s when two foreign visitors, a German and an American, happened upon the village, decided to buy most of it, revitalized it, and turned it into a tourist spot (and even, for a brief time, into a set for a movie company). Today Bardou is a popular place for travelers — who are mostly city people, and spend money that was mostly earned in cities. The Bardou story contains examples of several of the forces that import-replacing cities radiate, according to Jacobs. These forces are central to her thinking. There are five of them: Markets. Cities house a lot of people who need a lot of goods and services, and are therefore strong markets to sell goods and services to. This was the force that acted on the Bardou area when it was a Roman mining region, and again today when it functions as a tourist spot for city vacationers.
Inline links: Phillips curve, https://substackcdn.com/image/fetch/$s_!9wEn!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F850ce64a-4367-4a7a-a9ec-e8eb1af3ed08_399x292.png, Our World in Data, https://substackcdn.com/image/fetch/$s_!zS15!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7d533e64-f407-4b05-aea5-5b5a9dbdc7bc_1600x1130.png, import replacement, https://substackcdn.com/image/fetch/$s_!5j2T!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7f2675d9-ce56-4ac5-9b78-a16720269dea_1600x1159.png, import substitution industrialization, Scott’s review of, Bardou, https://substackcdn.com/image/fetch/$s_!RfMs!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fc119b085-f7b3-4e09-a586-9f4fc4c2ea21_1200x1600.png
It was the golden age of technocracy; it was the triumph of high modernism. From now on wealth was assured, because we weren’t blind anymore: we had the curves. And yet — by the 1970s and 1980s, when Jane Jacobs was writing, the theories all stopped working. There was high inflation and high unemployment. People called it stagflation. Keynesian advisers in various governments were devastated: either their ideas were wrong, or they were applying them wrong. Economists such as Milton Friedman, from a rival school of economists called the monetarists or the Chicago school, came to the rescue — but their remedy, Jacobs believes, only made things worse. Whatever governments did to increase employment made inflation worse; whatever they did to attenuate inflation killed employment. The seesaw from the theories was working in application, even though it didn’t explain reality anymore. Stagflation was not supposed to exist, so stagflation could not be fought. At this point we’re near the end of Chapter 1, the densest part of the book. Jacobs has artfully guided us along economic history and laid out the mystery for us. What’s going on? we wonder. How are we supposed to deal with the two-headed monster of stagflation, if all economists are stumped? Then Jacobs, in a masterstroke, flips the whole thing over. I was impressed enough that I would have inserted a spoiler alert here, if it didn’t feel so silly putting a spoiler alert in an essay on economics. Stagflation is not a strange monster from legend. It is, Jacobs says, just the normal state of everything. Backward economies are in fact constantly in a state of stagflation. The prices in a poor country like Portugal or India (her two examples) feel low for an American or Canadian, but they’re high for most Portuguese or Indian people. At the same time, Portugal and India provide too few jobs to their residents. Inflation and unemployment are both perennially high, and none of that feels surprising whatsoever. Stagflation, in short, is just good ol’ poverty. All these fancy economists, from Cantillon in 1700s France to Keynes and Friedman in the 20th century Anglosphere, were thinking and writing about unusual places: rich countries that were undergoing fast economic development. They were making the classic mistake of treating poverty as a mystery and wealth as a given, when in fact poverty is the normal order of things and wealth, when it does occur, is what warrants an explanation. The result is that we don’t really know how to fix the economy of poor countries, nor do we know how to deal with decline in rich countries, whether we call it stagflation or something else. Jacobs derives from this a pretty damning view of macroeconomics. It is to her a science that has failed again and again, each time engulfing the equivalent of billions of dollars in wasted wealth. “We must,” she writes at the close of Chapter 1, “find more realistic and fruitful lines of observation and thought than we have tried to use so far. It is bootless to choose among existing schools of thought. We are on our own.” Fortunately, she has some ideas. II. Nations and the Wealth of Cities The original sin of macroeconomics, Jacobs believe, is to treat sovereign countries, or nations, as the main unit of economic analysis. This error, she claims, goes back to mercantilism, one of the first formal economic policies. Oversimplified, mercantilism states that wealth is synonymous with the amount of gold and silver in a nation’s treasury. This makes nations the main unit of economic analysis by definition. It’s a tautology — and one that was somehow embedded so deep in economic thinking that even the non-mercantilist Adam Smith would eventually choose, for his masterpiece of economic theory, the title An Inquiry into the Nature and Causes of the Wealth of Nations. Today, even though mercantilism has long been obsolete, we perpetuate the same tautology whenever we talk of the Gross Domestic Product or look at the very nice charts from Our World in Data, which for the most part allow only one level of resolution: sovereign countries. Of course, nations are an economically important concept because of that one property: they are sovereign, and therefore they write laws and implement policies that affect the economy. These policies can be productively compared. But that’s about it — for everything else, nations aren’t the right way to think about wealth. One reason is simply that they’re very different from one another: “it affronts common sense,” Jacobs writes, “to think of units as disparate as, say, Singapore and the United States, or Ecuador and the Soviet Union, or the Netherlands and Canada, as economic common denominators.” I would add that countries are arbitrary and changing: when the Soviet Union was replaced by 15 sovereign countries, the economic reality didn’t suddenly reshape itself to match the new borders. Lastly, nations contain, under the hood, many sub-economies that are also highly different from one another. None of that is secret or forbidden knowledge. Everyone has always been aware that New York City, or Milan, are economically very different from rural Mississippi or Sicily. But I find that it’s far easier to think in terms of “the United States” or “Italy,” especially when you’re not from there. Nations are an abstraction of real-life complexity, and are accordingly very tempting to use. Also, they’re often the entities that collect statistics, which is another difficult-to-resist temptation for anyone who likes quantitative data. Cities as Radiators of Economic Forces If nations aren’t the best unit to analyze the economy, what is? This is a Jane Jacobs book, so the answer is obviously going to be cities. Jacobs doesn’t actually give a clear argument why. Maybe that was in her previous book, The Economy of Cities. So far as I can see, her reasoning is, ironically, a bit tautological: “all developing economic life depends on city economies; it depends on them by definition because, wherever economic life is developing, the very process itself creates cities and has probably always done so.” But so far as I can see, this reasoning is correct. Cities concentrate people, and therefore economic life, and therefore economic power. The driving force for all this is a phenomenon that, from what I gather, was discovered by Jacobs when she wrote The Economy of Cities: import replacement. Consider, say, Boston back when it was a tiny settlement, not yet a city, in colonial times. At first, Boston didn’t produce much, especially not much that would be of interest to its main trading partner, London. It exported some natural resources: timber, fish. Whatever else the Bostonians needed, they needed to import it from other cities, again mostly London. (Remember to think of imports and exports in terms of cities, not nations.) For instance, at first, all metal tools in Boston came from European cities, and were paid for by the revenue from selling the timber and fish. Then, one day, some Bostonians decided to build an ironworks and make metal tools themselves. (Pictured: a reconstruction of the Saugus Iron Works, established 1646.) This wasn’t of any interest to London or other European cities. The Bostonians weren’t nearly as good or efficient at making metal tools as Londonians were. So Boston couldn’t export the metal tools back to Europe — but it could use them internally, and also export them to other American cities that were about as poor as Boston was, or poorer. Internally, this meant the spark of a manufacturing economy in Boston, as easily obtained metal parts made it easier for other Bostonians to replace other imports from European cities, and eventually develop a symbiotic network of industries. It also meant that the revenue from fish and timber could be used to import new things, including new innovations from European cities (which would later become opportunities for more import replacement). And because there were customers for Boston-made metal goods in New York and Philadelphia, and eventually Cincinnati and Chicago and Pittsburgh as these cities came into existence, it meant additional revenue for Boston that it could reinvest into developing its production further. For Jacobs, virtually all city development can be seen through the lens of import replacement (which, to be clear, has approximately nothing to do with policies of import substitution industrialization; import replacement is not a policy, but a naturally arising free market phenomenon). Her book contains many other examples than Boston, such as Venice, which started off in the early Middle Ages as a small town that sold salt to Constantinople, but then diversified its production to become one of the wealthiest cities of its time; or Taipei and Kaohsiung, two cities in Taiwan that kickstarted their development not long before the 1980s, by forcing expropriated landlords to invest into local import-replacing businesses. One is reminded of Scott’s review of How Asia Works. Import replacement, then, is what makes cities economically powerful. And this power is so great that it causes ripples in distant places. In fact it is the main reason that anything happens at all in non-city areas. Jacobs gives the example of Bardou, a small village in southern France. Bardou looks like this: To the extent that Bardou ever had an economic life, that life was almost entirely driven by distant cities. In ancient times, the area was populated because of iron mines nearby. The mines were exploited to serve the needs of people in the distant cities of Lugdunum (Lyon), Nemausus (Nîmes), or even Rome. As Jacobs notes, we could say that the mines served “the Roman Empire,” but that would be another example of using the abstraction of sovereign countries when we should instead be specific. It was Lugdunum, Nemausus and Rome that wanted the iron — not some random rural area of the empire, and certainly not the part of the empire in which Bardou was located. Eventually the mines and the region were abandoned. More than 1,000 years later, peasants moved into the area and built the modern village. For centuries they lived a wretchedly poor life of subsistence farming. No cities exerted any influence on it, and indeed nothing happened. Then, in the 19th century, the people of Bardou learned that they could improve their situation by moving to distant cities such as Paris, and most of them did. Again, the force wasn’t being exerted by “France”; Bardou was already part of France. The force was specifically being exerted by Paris and other cities with jobs for poor peasants. By the 1960s, only one old man was left. That’s when two foreign visitors, a German and an American, happened upon the village, decided to buy most of it, revitalized it, and turned it into a tourist spot (and even, for a brief time, into a set for a movie company). Today Bardou is a popular place for travelers — who are mostly city people, and spend money that was mostly earned in cities. The Bardou story contains examples of several of the forces that import-replacing cities radiate, according to Jacobs. These forces are central to her thinking. There are five of them: Markets. Cities house a lot of people who need a lot of goods and services, and are therefore strong markets to sell goods and services to. This was the force that acted on the Bardou area when it was a Roman mining region, and again today when it functions as a tourist spot for city vacationers.
Inline links: Our World in Data, https://substackcdn.com/image/fetch/$s_!zS15!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7d533e64-f407-4b05-aea5-5b5a9dbdc7bc_1600x1130.png, import replacement, https://substackcdn.com/image/fetch/$s_!5j2T!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F7f2675d9-ce56-4ac5-9b78-a16720269dea_1600x1159.png, import substitution industrialization, Scott’s review of, Bardou, https://substackcdn.com/image/fetch/$s_!RfMs!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fc119b085-f7b3-4e09-a586-9f4fc4c2ea21_1200x1600.png
Your Book Review: Lying for Money
May 26, 2023 · Original source
Adam Smith was breaking with centuries of tradition when, in The Wealth of Nations, he frowned practice of price fixing by describing it as a "conspiracy against the public." And even though believed that price fixing had a pernicious effect, he believed that it would be "impossible indeed to prevent such meetings," as any meeting that tried to ban conspiratorial price-fixing would have either been impossible to execute, or inconsistent with liberty and justice. (He wrote this in 1776, but had the US Constitution and Bill of Rights existed at the time, he might have argued that a meeting between two competitors to decide how to price their wares would be protected by the First Amendment.)
Your Book Review: The Educated Mind
July 14, 2023 · Original source
Egan’s insight is that these obsessions give teenagers a sense of meaning, and that we can use them as tools to make middle schools that overflow with meaning. From meaningless to meaning-soaked Again, Egan sketches out a new kind of curriculum subject-by-subject. Before, his trick was to ask where the subject first evolved out of; now, it’s to ask who first discovered or created the specific content we’re teaching. “All knowledge”, he writes, “is human knowledge. Everything we know is knowable through the lives of its inventors, discoverers, or users, and we can have access to that knowledge through the hopes, fears, or intentions that drove them”. Middle school math Who first discovered the concepts students learn in math? The answer, of course, is a wide diversity of curious men and women living across the world over the last few thousand years. Egan says: bring those people into how we teach math. If we used gossip and heroes to help students find it meaningful, what kind of math would result? When we teach the Pythagorean theorem, we should give a sense of who Pythagoras was — a cult-founder who worshiped numbers to find God, whose followers (according to a piece of ancient gossip) murdered one of their members who discovered irrational numbers! Q: Well, sure, that works for Pythagoras, but he’s a known nut job; surely most math doesn’t come from such interesting roots? When we teach the Cartesian coordinate system, students should meet Rene Descartes, the Calvinist French polymath who saw the possibility that math could decipher the world, if only we could unite algebra and geometry… and invented the xy-plane to do exactly that. When we teach scientific notation, we should call our students’ attention to the importance of the number zero, and tell them the story of the Pope who tried to introduce Arabic numerals to Christian Europe and may have been assassinated because of it. When we teach algebra, we should ask students why “algebra” is Arabic for “the fixing of bones”, and tell the story of what Muhammad ibn Musa al-Khwarizmi was up to. We could do this all day. Literally everything students learn in school was first invented or discovered by some interesting person who was struggling to accomplish something hard. To learn is to connect with those people, whether we know it or not. Egan says: help kids know it. Math has been dehumanized: re-humanize it. Q: So the math curriculum needs to become a history of math curriculum, and math teachers need to become history teachers? No, the content needn’t change. But with surprisingly little work, we can bring in the gossipy stories of heroes, and their obsessions can spread to students. Middle school science Who first discovered the things students learn about in science? If you’re thinking “scientists”, you’re only partially right. Most of the big-picture ideas that we now think of as “science” were discovered before the word “scientist” was invented, or the discipline was professionalized. Frequently, they were hatched by true amateurs, working in their free time, hungry to unlock the secrets of nature. We can use gossip and heroes to spread their obsessions to students just as we taught math, but Egan points out two twists. The first is that the content itself can take on heroic qualities: everything is impressive, when you look at it in a certain light. In an interview, Egan once said: “My book is an attempt to show that, indeed, everything in the world is wonderful, but that schools are designed almost to disguise this slightly shameful fact. We represent the world to children as mostly known and rather dull. The opposite is the case: we are surrounded by mystery, and what we know is fascinating”. What would even the most boring subjects look like, if we emphasized their heroic qualities? Well: What’s a tooth? Bone, wrapped in rock, surrounding tiny cells that your body feeds with blood. What’s a bar of chocolate? A crystal of jellyfish-shaped fat molecules stacked together; when you put it in your mouth you shake them apart into a writhing confusion. What’s the air around you? The bottom of a 10-mile-deep ocean; when you put your tongue over a soda straw and your Pepsi stops leaking out, it’s not because a “vacuum” is “sucking” it up, but because that ocean is squeezing it into your face. Again, we could do this all day! And in middle school science, we can. Everything in the world is wonderful; we can help students see this again and again. The second twist is that science is a subject rich in extremes. Here Egan introduces a concept that we’ll see crop up again: “15-minute segments”. To help us fit as much wonder as possible into a school day, he suggests we supplement the usual school subjects with a few quick lessons. To infuse science with extremes, he suggests we add on three: “human & natural records”, “extremes of animals & plants”, and “cosmology”. Middle school history Who first made the things students learn about in history? Why, the historical characters themselves! Since we’ve given kids a grounding in history in elementary school, now we can build on that, going through many of the same events as before, but in more depth, and more vividly. We’ll leverage the interest with other people’s inner lives to tell stories focusing on the perspectives of the people who made history — zooming in, when possible, on scandalous details. We’ll leverage the tool of idealism to choose historical characters who chafed against their surroundings, and understand what they were trying to accomplish. What was their vision of the world? What did they hope for, and what did they fear? Q: Isn’t the “great man” approach to history out of fashion? Egan’s approach doesn’t say that “great men” made history — it’s just leveraging gossip to help kids see history as something meaningful that can expand their own possibilities. “Early adolescence is commonly a time of intense and vivid emotional life, and also a time of deepest boredom and depression… [We] can give shape to the intermediate curriculum and offer the students a world that is rich, complex, varied, and as intense and vivid as their own emotional lives”. We also should add on another “15-minute segment” just to pump in as many biographies as possible, and from people who don’t always fit into the normal history curriculum. Call it “Brief Lives”, and throw in anyone who’s struggled to push some limit — Mary Wollstonecraft, Jesse Owen, Dietrich Bonhoeffer, one of the students’ great-aunts, whoever. As students get older, this can transition to “People and Their Ideas”. Here, we’d focus less on the details of the person’s life, and use it as a backdrop to showing how meaningful some of history’s most important ideas could be. Think Aristotle and syllogisms, Edward Said and orientalism, Confucius and propriety, Cornel West and race, Buddha on the four noble truths, Muhammad and the five pillars, Karl Marx and communism, Adam Smith and the invisible hand, Thomas Hobbes and the state of nature, John Locke and natural rights, Jeremy Bentham and utilitarianism, Thomas Aquinas on the sacraments, Martin Luther on faith, Voltaire on the freedom of speech… you get the idea. Q: Can you really get a profound understanding of utilitarianism in 15 minutes? Yes! The point of this segment isn’t to develop a systematic understanding of any one idea, it’s to introduce students to the exciting possibilities of human thought. (As a bonus, this might make them less likely to fall for the first ideology that they encounter later in life.) Diversity is important for this — as it is with culture. Throughout this, we should also be trying to expose students to as much cultural diversity as possible, because in high school, we’ll be trying to make sense of our society, and it’s impossible to do that unless we have something to compare it against. Middle school literature & language You might think that this subject would be easy — that middle school literature is already filled with “strong and clear narratives”, that it deals with “transcendent human qualities such as courage, love, and persistence”, that it focuses on “extremes of human experience”, that it examines “something strange and exotic”. You’d be right! Egan’s pretty happy with a bog-standard middle school literature curriculum, done well. In this part of the book, his spends most of his limited space suggesting three rather odd activities which could also be useful — especially for increasing students’ awareness of language, so they can use it better. The first is etymology — not, however, memorizing lists of roots, but in being told the entertaining backstories of specific words. Take the word “berserk”, for example — we now use it to mean something relatively mild (“if my mom catches me coming home late, she’ll go berserk”), but it comes from an old Norse word meaning “a raging warrior of superhuman strength”. And that’s because ber meant “bear” and serk meant “shirt”: soldiers of the bear cult would don the skin of a bear to, in their minds, transform into one — howling, foaming at the mouth, and gnawing the rims of their shields. (Most adults walk through life with little understanding that the words falling out of their mouths are entities, with their own back-stories. Communication is, at the very least, more interesting when we become aware of this.) The second is to add on another language to learn — not, this time, to become fluent in it, but just to become aware of how very different human languages can be. (For native English speakers, Sanskrit might work well, or Cantonese, or perhaps even ancient Egyptian. Again, the point isn’t for this language to be useful — it’s to explore diversity.) The final one is to study humor — not just jokes anymore, but comedy at its finest. Egan cites (at length!) Monty Python as a group of people who were particularly brilliant in their use of the English language. Examining their skits can lead us into not just an appreciation of semantics (the study of how meaning is made from smaller pieces, like etymology) but also pragmatics (the study of how meaning is made in social situations). Pretty heady stuff, for a conversation about a dead parrot. Part 4: A new kind of high school I’ll confess — I loved parts of high school… and among nerdy folks, I suspect I’m not alone. For some of us, this was a golden time. Even at my local public high school, I had access to academically thrilling classes — especially, in my last two years, advanced literature and history. I felt like I was finally understanding the ideas that mattered. In any case, Egan is quick to acknowledge that, at this level, the sort of education he advocates really is being practiced in some places. What he can add is an understanding of what makes it wonderful, how to make it even more wonderful, and how to make it wonderful for many, many more people. What’s the matter with high school? Far too often, even when high school classes are intellectual, they’re dry. For the majority of students, all this academic stuff is experienced as utterly lifeless, a mass of dead information to be squeezed inside one’s head for a test and then left to evaporate. Egan mocks the curriculum wars that seem to be a permanent feature of the teaching life; quoting the sociologist Pierre Bourdieu, he says “while the academic left and right bicker over whether the curriculum is too traditional or too radical, they fail to recognize that most students absorb so little of academic culture that the bickering is largely irrelevant”. Why so dry? Egan suggests three reasons to explain this. First, because high school academic classes are too often masses of small details with no sign of the big picture. Second, because they’re typically slavishly disciplinary, and aren’t able to address the questions that span the disciplines. Third, because they’re often designed to bring students through what everyone is sure of, and hide away any controversies. In all of these, Egan suggests that what’s called “academics” in high school is too often a dim imitation of what real academics are actually practicing. There’s a fourth reason, though, and it’s probably the biggest of all — by the time they get to high school, most students haven’t actually learned that much! An academic approach is designed to connect small details into the big picture; for people who arrive in high school (and college) classes without having already collected much in their heads, academics are going to taste dry. (An implication of this for anyone trying to improve schools is that we might not want to start with high schools. If your goal is to create a new kind of academic learning, first start at elementary school — or barring that, middle school.) What motivates mad scientists? When we wanted to re-conceive the elementary and middle school curriculums, we looked at what students were already good at — kids’ cognitive strengths and adolescents’ obsessions. For this level it might be easier to look — for reasons that will become clear when we finally unveil Egan’s crazy-sounding definition of education — at the sorts of things that bring intellectuals joy. Q: Which intellectuals? Take your pick. Galileo, Einstein, Smith, Marx, Goodall, Chomsky, Curie… all the people who took to the life of the mind like fish to water. But that’s a lot to hold in my mind at once, so I’m just going to think about Doc Brown from Back to the Future: He was high on intellectualism I’ve never been there, but the brochure looks nice Let’s call these people “mad scientists”. And let’s pretend we once again took up our job of being primatologists, and snooped on these folks “in the wild” (“in the lab”? this is beginning to get recursive…)… what would we find motivating them? Asking simple questions, for one. (What is space? What is society? What is a human? What is language?) Building general schemes (big theories) that hold lots of evidence together. Finding their place in the cosmos. And (perhaps above all) seeking certainty. Once again, Egan suggests we use these as tools to remake the curriculum. From dry to daring What could a high school curriculum look like, if it were rebuilt on these tools? Once again, Egan has a trick. This time, it’s to ask what fights have driven the development of each of these fields forward — and how we can help students enter them. First, a mini-segment! Intellectuals invented the academic disciplines to better pursue the life of the mind, but the disciplines can get in the way. Some of the most important intellectual discoveries that could help students are too big to fit into any of the disciplines. We need a place to introduce them plainly. Egan proposes another mini-segment — again, just 15 minutes a day, a few times a week — called “Metaknowledge”. Q: Isn’t that already in the International Baccalaureate program? Yes, he acknowledges that he’s borrowing from that! This segment would introduce ideas that would enrich student thinking across the disciplines: game theory, cognitive biases, systems thinking, Bayesian reasoning, epistemology, ethics, logic, cultural evolution, and so on. High school literature How can we help students enter the big fights of literature? Intellectuals of a literary bent — professors, critics, poets, novelists — delight in arguing over literature like rabbis arguing over the Talmud. Take, just for one example, the debates over Shakespeare’s character of Ophelia. Does she love Hamlet, or is she a victim of his emotional abuse? Is she truly insane, or is she acting? Is she passive, or is she pulling the strings? Oceans of ink have been spilled arguing over questions like these; our students can, perhaps, spill a few ounces more. The usefulness of arguing literature, for Egan, isn’t that it’s oh-so important for educated adults to know a lot about Ophelia. (This, again, was where the academicists went wrong — in thinking that being educated was about getting the best knowledge in your head.) Rather, arguing over literature is a training arena for the all-important intellectual move of this kind of understanding: building general schemes out of evidence, and struggling with anomalies. One person, for example, might hold that Ophelia is insane, and cite all sorts of obvious evidence — her father just was murdered by her lover, she rants nonsense while (bizarrely) handing out flowers to friends… But then he’s challenged when he reads a scholar pointing out that, to people in Elizabethan England, types of flowers have symbolic meanings. How does he deal with that? He could ignore it, claiming it an over-reading of Shakespeare. (Sometimes a flower is just a flower!) Or he could address it, complicating his own scheme. This intellectual work is best done with other people, who are incentivized to challenge your understanding of something, and go back and forth, building competing models and calling attention to anomalies. This process — the “dialectic” — pops up again and again in the academic disciplines. It’s the center of how understanding works, at this stage. And the nice thing about practicing it on literature is that, more so than in history or science, the evidence is shared knowledge — it’s right in front of everyone, written out. But there are other ways literature class can be helpful to the general life of the mind. Egan also suggests that we’ll want to specially include literature that helps students understand complex ideas. Camus, Orwell, Borges, Calvino might be particularly helpful here… and I imagine that genres like science fiction and magical realism might be particularly useful, too. (Note, though, that once again none of this requires a radical remaking of the curriculum, or of the canon of texts that we traditionally assign to high schoolers.) Q: Oh yes, the canon — what does Egan have to say about the canon wars? When he wrote Educated Mind in the nineties, the long-brewing canon war was approaching its inevitable apocalyptic climax. On one side of this Plain of Megiddo were the pro-canon traditionalists, arguing that we should keep assigning the texts that had been argued over for centuries. Facing them were the anti-canon reformers, arguing the standard texts over-represented the perspective of dead white men. Onto the middle of the plain rides Egan on a white horse, who bellows above the din: “I’VE GOT A BUSLOAD OF HIGH SCHOOLERS WHO WANTS TO JOIN IN, EVERYONE OKAY WITH THAT?” To do so, he says, we need to give students the arguments from both sides. So, for example, bell hooks, Edward Said, and China Achebe should be on the syllabus, as should Allan Bloom, Mortimer Adler, and Diane Ravitch. And of course they should actually read the texts cherished by both sides, too, so they can argue better. High school history How could entering the big fights help us reinvent high school history? First, we might look for dueling histories. It’s time for students to get into historiography and understand that history isn’t just what happened, it’s something we make. We might help kids read chapters from Howard Zinn’s socialist history of America alongside the corresponding chapters from Paul Johnson’s conservative history of America. How could big questions help? We want to help students see how various people have disagreed over some of the big questions of what human history is, at its most basic. We can have them compare Steven Pinker’s theory of civilization’s progress (Better Angels of our Nature) with Yuvah Noah Harari’s theory of civilization’s woes (Sapiens). We could have them compare so-and-so’s account of human history as an ever-expanding unlatching of energy sources with Robert Wright’s account of human history as unlatching more and more positive-sum games (Nonzero). What role could the lure of certainty play? To help them grow their skills at finding anomalies, we might help them work through pseudo-histories and conspiracy theories. Q: Conspiracy theories! Oh, come now, you’re playing with fire. Well, the world is on fire. Our students will spend the rest of their lives encountering terrible-but-beguiling arguments about how the world works; if we don’t prepare them for those, what have we been doing? So we should introduce arguments that the Moon landing was a hoax, that the Illuminati founded America, that aliens built the pyramids, and so on. At no point can we demean students for falling for any of these theories — the job of a teacher at this stage, Egan writes, is to support students in their reasoning even when their beliefs are offensive and stupid, gradually offering anomalies. There’s no way out of bad theories except through them. By the time students graduate, we want them to have wrestled with terrible ideas and — for a while — lost. They need to experience what it’s like to change their minds about something they felt strongly about. They need to viscerally realize, in Feynman’s famous phrase, “The first principle is that you must not fool yourself and you are the easiest person to fool.” High school natural science How could entering the big fights reinvent high school science? At present, so much of the high school science curriculum — especially “honors” classes — is oriented toward helping amass details. (The same is true of 100-level university classes, which famously “survey” the field to prepare for more advanced studies. I always thought this was stupid — of the huge lecture hall of students in my Geology 100 class, how many went on to take even a second course?) The meaty debates that propel science forward are held back. Egan complains: “The more general and speculative theories in any discipline are treated like an unconventional and disreputable relation who, even though the children find her exciting and entertaining, must be kept hidden from view, her very existence denied as long as possible”. This is a stupid approach — students with an adventurous bent are convinced that science isn’t for them. Egan proposes, simply, that we flip this, and organize high school science classes around the big debates. We shouldn’t be ashamed at how, well, adolescent this might look: “the dramatic, speculative, and contentious theories will be up-front in the early years of the [high school] curriculum”. What might those be? Egan doesn’t give a list, but we can spitball some: instead of explaining what “matter” is from the top down, a physics class could problematize “matter” by following the debates over the nature of dark matter and dark energy, and by becoming familiarized with the various interpretations of quantum mechanics
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Bad Definitions Of "Democracy" And "Accountability" Shade Into Totalitarianism
July 28, 2023 · Original source
It might sound like I’m arguing that it’s okay for small things like your private life to stay undemocratic and unaccountable, it’s only big things that change society which should be subjected to democratic scrutiny. I’m not sure I believe this. Martin Luther King changed society a lot, but not through being democratic and accountable - he didn’t ask permission from the majority of Alabama voters before marching, and he didn’t lodge his complaint with the appropriate state officials and wait for the government to solve it. He just marched. Sure, part of his march was to change voter minds and get new democratically-passed laws2. But part of it was to provoke direct extragovernmental change of people being less racist in their everyday lives. If MLK had been “accountable” to someone, he never would have been able to do what he did. But what he did was what we tell everyone to do: try your best to make a difference and leave the world a better place, according to your own values, without needing permission from the government or the majority of people. The same is true of the original Martin Luther, of Adam Smith and Karl Marx, of George Orwell and Bill Gates, and virtually every important, heroic, or interesting person in history. The only society that doesn’t leave space for the person trying to make the world better as they understand out outside of the existing governmental process is - again - totalitarianism.
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Your Book Review: The Weirdest People in the World
August 11, 2023 · Original source
Coming as he does from the scientific side of the aisle, Henrich isn't just going to tell a story. He has a hypothesis about an empirical puzzle. The puzzle is the most important question, the big one, the one that once you think about it's hard to think about anything else, the economists' Holy Grail since Adam Smith: why are some countries rich and others poor?