Tuesday, November 29, 2011

Selecting economic policy based on science not ideological preferences

Karl Marx and Adam Smith dominate ideology. They did not perhaps form what today is referred to as left and right, but they do crystallize the distinction.

On the right, crystallized in Smith, is wealth best created in an open market, with control invested in ownership and the traditions of the society in the form of the political structures of the day which in the late 18th century in Scotland were invested heavily in the ‘rights’ of a landed gentry.  This ideology is often referred to as conservative.

On the left, crystallized in Marx (writing just a few years after Smith, in the early 19th century), was a view that wealth was best created by harnessing community resources in a deliberate manner, using centralized planning to achieve community wealth and thereby to the betterment of people, hence a position often referred to as socialism. 

Both Smith and Marx are accepted as social scientists.

The question addressed here is ‘were they?’ If they were not, then what status their ideas, and what status afforded the library of books written since on both sides? And yet more importantly, how do we know and judge the worth of their ideas? 

Before I discuss social philosophy I need declare a few basics on my own predispositions so that you know where I am coming from:
  • As a species we move forward, survive and deal with our environment via the ideas and understanding we have of it. The better the ideas, the more effectively we manage.
  • Each person is responsible for their own mind and ideas chosen and allowed to shape action. 
  • I believe in the nousphere of Tielhard de Chardin (note spelling as ‘sphere of thought’). The nousphere shapes us all, especially today with the emergence of the web as a tool in globalization of the nousphere, but very few shape it. In it emerges the long term best of us, with the worst of us embedded in it as sobering lessons we need never forget. 
  • I believe in the nousphere as humanity’s rudder.
  • I passionately believe in the right of each human spirit born into the world to seek and achieve its own fulfillment. The only constraint I assert is that in seeking one’s own fulfillment one must recognize and respect the right of each other to seek theirs, and our ethics need reflect this respect and acceptance. (This is why I oppose Islam, there is no ‘one way’, and no-one has any right to assert their way on anyone else, the Western religions for example, have regrettably historically been arrogant and  zealous as Islam is today, I cannot undo historical failings, but can resist the same mistake in others today.)  
  • I am fully committed to the ideas of Kahil Gibran that children come through us but are not of us, and they are of the most precious part of the world. Hence the youngest of our emerging spirits deserve the most love from us we can muster, but with love must first come nurturing offering understanding and insight whereby they may find their own fulfillment: No matter how difficult that may be for us…
  • I passionately believe it is the quality of our thinking that determines our individual and collective fate.
  • I passionately believe in reason as judge of the ideas we choose. We are not born with ideas; they are acquired tools, the practical apps to forge our spiritual fulfillment.
We come now to the central question, not which of the two ideologies do I most prefer, but which is most grounded in science, and on which can I most depend to deliver the result for me and for my children and friends? 

Which scientific social structure is the best set of ideas? Note the shift in terms, not ideology, but choice of scientific social structure. Ideology is selection of a preference, often carried out under the guise of science, but as I will show, there is no where globally, any set of ideas on social structure that even gets close to being science. 

I will also use the term social philosophy, please accept his term as scientific social structure plus the sort of personal philosophy I have summarized in the bullet points above which contains some points that can only be regarded as spiritual choices and hence personal. So I can have a different social philosophy from my neighbor, but we share the same scientific social structure as the core of our social philosophy. To make our choice of social structure we now need to consider some crucial aspects of science and how can we judge good science from poor science. 

Think of a box: Now imagine some sort of input into the box, and output from the box. What caused the output? Well, whatever happened to the input into the box resulted in the output from the box. In short the internal mechanisms of the box generated the output from the input. 

Now, imagine seeing inside the box, see part of the mechanism of the box, we can see that as another box (1), and there are more mechanisms inside this box (1) inside the box. Now imagine we can see into box (1), we can see part of the mechanism of box (1) as a box (2), and box (2) has more internal mechanisms that produce outputs from inputs. Now imagine seeing into box (2)….This box within box within … with each box having internal mechanisms I summarize as ‘there is always a mechanism’

We all understand necessity; it is something happening because it is not possible for anything else to happen. Mechanisms drive necessity; it is the mechanism of the box that makes ‘it’ happen (whatever ‘it’ is).  A car without brakes heading to a wall fifty feet away at 30 km/hour will hit the wall because there can be no other outcome. The mechanisms inherent in the system will result in the crash. 

We often have no idea of what the mechanism is, but know there is one, to assume that there is no box inside the box we are dealing with is to assume that the box we are dealing with has no form of internal mechanism that in any way influences the outputs. The assumption that there is no internal mechanism is a vast assumption, since at that point our learning about why the box does what it does ceases and growth of our knowledge ceases… now this could happen, but how will we know this is actually the state of affairs, it is counter to the whole of human history, that is just because we are not smart enough to ‘understand’ or ‘see’ into the box does not mean the question of the nature of the internal mechanisms of the box will never be solved by someone some time in the future. The safest assumption on our part, the assumption based on all human history to date, is that there is always a mechanism, even when we are not smart enough to understand it or ‘see’ it[1]

We now need consider the relationship between necessity and cause.  we can understand necessity and mechanisms in the equality: Necessity = operation of mechanisms. We can understand the idea of mechanisms, and that systems operate according their own internal mechanisms. So for example, we understand the solar system operating on the basis of its internal mechanisms, and given no external factor to interfere with that mechanism, we know the sun will rise tomorrow.

Frequently we do not know what the mechanism is, but that does not mean it does not exist. When we do not know what the mechanism is then frequently we are forced to use statistics and probability functions to predict the outcomes of some input.into the system. But, again, that does not mean the mechanism does not exist.

So within this, what is cause? 

The use of the term 'mechanism', I propose as referring to those internal operations of a system with those internal operations generating the outputs from the system. We could then use the term cause as referring to the internal mechanism. However,  I suggest that the term cause implies some level of understanding, so if we say what is the cause..., or the cause is...then we are seeking or referring to details beyond general and rather meaningless statements such as 'it is the mechanism'. Likely, we would get a rather determined reply, 'yea, what bloody mechanism?'

As used this way, cause is then knowledge, namely knowledge of the mechanism, so we can state that the cause of the sun rising and setting is the progress of the earth around the sun under the influence of gravity.

Necessity is not cause which is knowledge of necessity. So cause is our conceptualization of the mechanisms, it is our knowledge of the mechanisms[2]. In the case of the solar system, cause is our conceptualization of gravity, and the structure of the solar system, within the broader knowledge of physics of the universe.

Now, as a general point what should we think of any set of ideas that offer no understanding nor in any way grounded in any form of causality of what they aim to discuss? Should we use or apply ideas that have no substance have no foundation? Would you go to a mechanic to have you car fixed when you know they did not know anything about cars?  All sounds a bit silly.  

So what? … You may ask. Well, these underlying issues have everything to do with our experience of our social existence. 

Let’s start with the question of understanding group behavior, no matter how big the group. 

Picture your community as a box. Imagine various inputs to that box, an election campaign, a local tragedy, a tsunami or earthquake. How can we now understand the output of the box that is the behavior of the group? We all know immediately that each individual will have a different reaction to any of the events, mentioned, that the output from the box (our community) will be some summation of the action of each individual. We have a box, the community, within it many smaller boxes, the mind of each person in the community. So what does this mean?

Immediately it means the internal mechanism of a group lies in the mind of each person in the group. Put another way, there is no causality in a group; all group causality lies in the individual minds in the group.  

Where does that leave the ideas of Adam smith and Karl Marx? Neither of these supposed scientists made the slightest attempt to analyze the causality of groups, yet both made very large claims about group behavior.  People followed what these men had to say, in the ideological conflict millions died and millions suffered variously in social and financial deprivation. All based on ideas of suspect intellectual status… without any serious analysis of what is really happening in the box called society which generated the outputs of the box.

For either Karl Marx or Adam smith to have the sort of intellectual integrity I argue is essential then they both needed to state the following about their work: in the absence of a general theory of cause, which could alter everything I have to say, I (Karl Marx or Adam Smith) then speculate that…’  I suggest that had such a statement been made the ideas of both men would have been treated with much more circumspection, and maybe millions would not have died and we would have avoided the financial crash of recent times.

How do we then approach understanding of social systems? The model says we need consider the core causality. So we must stop grand sweeping statements on groups and focus on what happens in individual minds.  

If we clutter a mind with lots of regulation, rules and controls you cramp creativity. 

If we eliminate rules in mind then we allow for emergence of opportunism, self fish disregard for others, self serving conduct, greed and corruption. In this world we inhabit today, I do not believe we can depend on inherent or innate human goodness or generosity of ethics to moderate excesses and greed. 

So where are we left? Well politically we have learned, and the recent financial crisis reinforces this learning, that fewer rules encourages creativity but also encourages and enables greed. While excess of rules and enforced control of centralized economies controls greed but crushes creativity, and the control of greed is limited since centralization results in high levels of political privilege where again too many people are sidelined. 

Effective political policy needs move beyond ideological slogans such as right and left and capitalism and socialism or communism; we need a balance of rules in each mind that walks the difficult line between strong creativity and entrepreneurial drive, and moderation of exploitation, greed, and political privilege. Along this line lies economic justice. 

Under my social analysis and theory, there will emerge globally just one political structure that balances the best and worst of us, aimed at deeper social justice, based on better social theory and insight including insight into social causality, and benefits all more than any other system.  

I have used two terms that I suggest are core social and political issues, the first is economic justice, and the second is social justice. To these I add a third, economic growth. 

To deal with the last first, it is unquestioned that without wealth there is often lack of water, health care, food, poor housing, inadequate security, etc. A healthy community depends on wealth. Hence economic growth is crucial to provide infrastructure for communities. I suggest these linkages are universal. 

Once economic growth under way, then it needs to be felt by those involved. This is economic justice. It is crucial to understand the term economic justice goes way beyond the crude idea of redistribution so familiar in socialism. Individuals need feel a sense of fairness. Owner, entrepreneur and employee must feel it is fair. Although likely none will state so, but it must be such all can live with it without violence and within just rules of dispute. 

As part of the exchange between organizations, work, and communities we need better economic justice, so salary gaps must be reasonable, directors and governance need commit to the communities that the organization serves, and must stop seeing the community as serving the organization. We must reduce privilege and jobs for the boys, when more capable people sit idle. And it is not profits that need be of greatest concern, but ensuring the wages, salaries and expenses go into the communities. It is unions (organized labor) that offer the pressure to balance excessive profit extraction, ensuring staff gain their share since they do indeed create much of the profit. 

We need much better insight into the framework of rules that best enables economic creativity without enabling greed and selfish, self-serving conduct.  Walking the ethically thin line to forge policy to curb the worst of us and draw forth the best of us. And in finding that line every nation can learn from every other, there is no right or left, but the policy line that most effectively balances the emotional forces and competing ideas and wishes within each of us. 

If any policy will not work in your mind then very likely it will not work in anyone else’s mind either.

Finally social justice, the extent the social structure (legislation) treats people fairly.  The social structure is the framework of rules and laws, it is this that must fall equally on all people with no group of people either excluded or privileged by the rules.  In particular no race or religion should be specified in the rules of the social structure. 

Given the liberal western philosophical foundations to my values as I stressed early in this article then I would seek the rules of the social structure to respect the right of each person to seek fulfillment.
  
We have then the conclusions in relation to seeking rigorous intellectual foundations to our economic and social philosophies.

  1. We need rules that limit greed and encourage creativity. To the extent all people are emotionally similar, with culture is less a factor than often claimed, it is likely that countries can learn from each other as they experiment to find the set of rules that balances economic creativity and greed.
  2. We need test rules not in relation to grand ideas of how groups may react, but in terms of how individual minds may react and see any rules as a necessary balancing force between conflicting emotions.
  3. Economic justice is for both the successful and wealthy and those not. We need better insight into ownership, obligations of governance to commit to communities, limitations on the range of salaries payable to employees, restriction of privilege arising from relationships, and balance of power so that employees feel able to counter the power of employers. Exploitation is not acceptable in any circumstances. Dividing wealth does not create wealth.
  4. We need legislation where every person feels able to pursue their own path, free of direction from anyone, where none are advantaged or disadvantaged.
These things seem to me as necessary; these things have nothing to do with left or right, socialism or capitalism or communism. All of these terms are passé; they never were effective thinking about the sorts of social circumstances we need that will serve everyone. 

Social system based on economic growth, economic justice, and social justice within a sustainable economic framework that does not destroy the environment. We need move away from old ideological catch cries and supposed divisions, and build better more effective rules as the basis of a fairer and more balanced society.

I believe in social structure that treats everyone as equally important, if you do not believe this then indeed we hold different social philosophies and I would be your political enemy.


[1] Modern quantum theory assumes a photon as a point particle and hence has no internal mechanism. This is a big assumption that necessarily leads to probability for predicting the outcomes of the photon. And while this gets excellent numerical results, the view of knowledge and science offered here raises question on whether probability is the actual state of the universe or is merely the tool that gets results and eventually someone sometime will solve the question of the internal mechanisms of photons. A second key point is that if we have theory that assumes photons have no internal mechanism, and that theory gets good results consistent with empirical evidence then we are likely not to look very hard for the internal mechanisms since we would be looking for something we do not think exists.
[2] This in the only analysis that separates cause and necessity, and this separation is essential if we are to understand both.