That was very interesting. So, neoliberal economists' deepest, perhaps unconscious, belief is that the "market" is a quasi-living creature that "thinks" by building more connections, known as markets. It sounds suspiciously like a god to me. That was a very interesting talk.
Notes, in lieu of a transcript: Economists privilege theory and see it as natural that theory should guide policymaking. Media studies has not paid much attention to the way economists think and talk. Technological determinism - tech leads to social effect X. History of economics of information, however, was not radically changed by internet. Internet obviously had effects, but since 1930s the foundation of the economics of information has been in place. Orthodox economics is roughly behaviorist, imitation of 19th century energy physics, does not look at motivation, information processing, because the models are too broad. Economists talk about the economics of information as a way to substitute for talking about individual cognition, allows them to use representative agents. How smart is Homo Economicus? Smarter, dumber, or the same intelligence as an economist? Power struggle implications. Can economists know more than the market knows? The idea that economists didn't pay attention to information until the 1950s is common in economics but silly. Some guy in media studies wrote a paper on why economists didn't pay attention to information until the 18th century. Historical factors, what changed that allowed the economists to innovate their theories? Actually, a lot of the economics of information was not born in the 1950s, but was cribbed from other fields. Information is given an inappropriately large role in thinking about economics. Shannon information theory in late 1930s spreads throughout the social sciences, including economics, but in fields other than economics the hype dies down. Neoclassical vs Neoliberal: NC since 1870s imitates physics, maximize utility etc. NeoLib begins in 1930s, separate thing. Neolib is associated with Hayek strongly. Hayek talks about information processing, elevates it to the central theoretical role in economics. Hayek is a bit of an outsider to neoclassicalism. Hayek and co. create a kind of cognitive economics. Hayek argues that the market is not an allocation device so much as an information processing system. (Transcriber's question, why not both?) By the 50s Hayek's people reject the correspondence theory of the truth. Hayek's model of the brain is a projection of his model of capitalism, as above so below. Scoffs. Prices embody all relevant knowledge. Hayek hates German thought. Hayek gets simplified into: marketplace of ideas. Anyone discussing the marketplace of ideas is a neoliberal shill. Hayek says knowledge is not centralized but decentralized in individual circumstances. Knowledge is incomplete sometimes contradictory. Economics is not about allocating resources, it's about getting good utilization of knowledge that is dispersed. Economists back then were anti-psychology, didn't want to associate with psychologists. They also claimed that their theories assumed perfect knowledge. This was an attempt to keep their old models without responding substantively to Hayek. Politics influenced economist's thought. The market is a more powerful information processor than anything else known to man. Three line refutation of socialism: the market is smarter than you, you want to override the market, therefore centralized planning is bad. Neoclassicals think they are socialists, so they want to respond to Hayek and refute the idea that people can't intervene on the market usefully. Neoclassicals decide to appeal to science to discredit Hayek. They copy the natural sciences, take hints about how they should model information, work it into their pre existing theory. There were three approaches to this adaptation: 1. Information as though it were a tangible thing, it can be bought, sold, divided. Relies on a weird interpretation of Shannon information theory. 2. Information as epistemic logic, philosophy. 3. Information as computers, Turing machines, etc. The crucial point: information depends crucially on the modeling choice because these different frameworks can't be translated into each other. Eg, 1. if information is an object, cognition is irrelevant, you can just buy information rather than learn. Eg, 2. if information is a blackwell indicative index then communication is signalling. Big data is based on this. Eg, 3. If information is symbolic, computers, learning is augmentation of algorithms, communication is the transmission of these algorithms. There's a group of economists at Kohl's commission that explore all of these models. Economists bounce around between models 1 2 3, the flaws in one lead them to one of the other two. Sometimes economists get hyped about game theory, Bayes. Sometimes economists talk about symbolic computation. Economists follow Hayek and talk about how information is going to be used by the government bureaucrats. Hayek changed his mind. Is information local or transportable? Is all knowledge tacit? Hayek says all knowledge is tacit, the market can use tacit knowledge but you can't use tacit knowledge. Economists start thinking about knowledge as local, accessible, and move to thinking about knowledge as abstract, inaccessible, metaphysical. Hayek argues that information exists in the world that no one knows, and only the market can find. Scoffs. This idea seeps into orthodox economics. Economists are antihumanist because they think that the specific details of individuals do not matter when trying to understand society, they use representative agents. Economists try to use markets to move information to fix problems that somehow move. It's not Adam Smith anymore. The market is a collection of various information processors, not one overarching system of exchanges. Now economists argue that regulators should reconfigure markets. Economists are bound up with privatizing stuff sometimes. Economists fail to acknowledge that the market can be stupid. This is a total reversal. Went from seeing individual agents as omniscient to seeing the market as omniscient. The change of economists' view of information changed the entirety of economic thinking. Economists see their role as smart people who intervene to fix society. Economists don't just preach about the wonders of the market, now they try to control the markets and make markets do their bidding, whether those markets are serving government, corporations, whatever. Concrete example: Spectrum auctions. For electromagnetic auctions, economists have a story. At first, the market was bad, then economists came in with their auction system and fixed the market. But my research shows that every step of this story is wrong. Congress mandated many different things, like putting liscenses in the hands of discriminated groups, mandated spreading out the licenses to avoid markets. Game theorists are hired but games theorists don't all agree. Many different alternative auctions were proposed, no consensus existed. The game theorists were hired by various corporations, and surprise surprise their recommendations favored the companies that hired them. Therefore, the government decided to make their own entirely different auction proposal, ignore all their recommendations from economists, ignore the targets mandated by government like diversity etc, and focus on maximizing government revenue. (Of course, the auction didn't actually maximize government revenue. You can't do experiments on one time phenomena, so this can't be conclusively proven.) Self summary: 1. Economists claim to talk in terms of welfare, but their agents have no cognition, what they know doesn't matter, therefore welfare doesn't matter. 2. It's not Adam Smith anymore. Markets are fractured, there are markets for X Y and Z. 3. Economists changed from high priests of markets to talking about a proliferation of different specific proposals. They pretend they have one single theory, but are lying and they have many different theories and pretend to have understood things in advance. 4. Finally, neoliberalism ignores thought and thinking.
Glad you appreciated the notes. I actually was disappointed by the talk because it's so relentlessly critical. It is true that the assumptions economists use to talk about the real world are sometimes inaccurate and inadequate. Nevertheless, simplified or flawed assumptions are necessary to begin to get a handle on complicated real world problems. While there have been many times economists' rationality assumptions have led to bad decisions, there are also many times when those assumptions have been important to good decisionmaking. Criticizing other people's work is a lot easier than improving upon it. And if all you do is criticize something, it implies you have a biased view and fail to appreciate whatever its strengths might be. Also, there is plenty of work being done by economists attempting to improve on the shortcomings of assumptions that are common in the field, and he doesn't acknowledge any of it. He paints everyone with the same brush. I don't disagree with the idea that a lot of work in economics is flawed. But his tone is very arrogant and condemning, when I'm unconvinced he could do any better. Implicitly, he wants us to think that because economists' tools are wrong, his own personal ideas about how things should work are correct. But that's not a valid inference - he is not God. He doesn't have any kind of automatic knowledge about which policies are best. So using flawed tools is inevitable, although we should recognize their limitations and try to improve on them. Just pointing out that a tool is flawed does not earn him any significant respect from me, nor does it make me agree with his own political theories more.
Thanks for the notes, but I have to add a few criticisms of your critique, if you'll permit me. "But his tone is very arrogant and condemning, when I'm unconvinced he could do any better." Since when are we, or is someone, only permitted to criticize if they can actually do a better job(!). We could apply the same rules to your comment/critique: you're not allowed to criticize, because I'm unconvinced you could criticize neoliberalism any better. Sometimes there is no solution, and there is no better job that can be done. "Also, there is plenty of work being done by economists attempting to improve on the shortcomings of assumptions that are common in the field, and he doesn't acknowledge any of it. He paints everyone with the same brush." Painting everyone with the same brush is referring to practically, not literally, everybody in a group. I can show one particular example from experience with economists: I have brought up climate change - really, ecosystem collapse - with lots of economists. I have never met one that thought it was a serious problem. With no exception, they all believed that the market would solve the problem. The more competent economists who are attempting to improve on shortcomings, to whom you are referring, are not attempting to solve any of the key crises in any practical way. Climate change is a civilization threatening issue, and I have no experience of any economists who are treating it seriously. It is only another market opening to them and for them. But, many thanks for the notes. I appreciate it.
@@the81kid when economists say "market would solve it" they are very likely referring to market as a pricing mechanism, a la richard Wolfe and market-socialism, and not "free-market" and "invisible hand" or other such tools of political rhetoric. It seems to me that when students of sociology talk to economists, they are talking about fundamentally different things. "Market-as-a-pricing-mechanism" doesnt say anything about how much governments can meddle with the markets in the form taxes, regulations and so on. "Market" based measures such as a revenue neutral carbon tax+dividend schemes are endorsed by economists from across the spectrum as the most effective, immediate step that world governments can take. Its efficiency is not something that can be hand-waved away with rhetoric. The city of london had reduced its emissions in 2017 to the same levels as that of 1890 (And the dividended benifitted the poorest 70% of the population) When critical theorists and leftists of the first world decry such measures as "insufficient", "incremental", or "too little", those of us in the developing world have no choice but to wonder if such callous purity testing is ultimately based on the knowledge that in case of a climate calamity, those of you in the first world would recieve much better aid from your governments than us in the third world.
@@psd993 However you want to define it - the "free hand of the market" or "pricing mechanisms" - economists do not believe in the real world. Two economists are locked in an empty basement. 15 minutes later, one of them opens a sandwich shop. This is the world economists believe in. "Externalities" are this mysterious ether from which we can create "wealth". Every problem can be solved, every resource can be replaced, at the right price. It's faith, it's a religion. The ecosystem is collapsing, and economists don't think this is a problem, because we just need to let the market find the right price to fix it. And if it doesn't find the right price or fix it, then it can't have been a problem in the first place. This is the magical world of the economists.
@@the81kid so all the economists writing about climate, from national news channels, and columns, to UN reports are just a small minority and your anecdotal bullshit is "the real truth"?
There really an obscure area here, market is a an all knowing entity, there's no market but markets imposed by economists and other agents, agents are dumb... all that together seems hard to reconcile. Of course he speaks of having different theories and present them as one only... as a mean of cultural domination.
@CrabApples Bodaciously Bitter Fruit's he's obsessed with him but he clearly doesn't understand any of his points. He understands the version that he created in his head, I'll give him that.
That was very interesting. So, neoliberal economists' deepest, perhaps unconscious, belief is that the "market" is a quasi-living creature that "thinks" by building more connections, known as markets. It sounds suspiciously like a god to me. That was a very interesting talk.
Notes, in lieu of a transcript:
Economists privilege theory and see it as natural that theory should guide policymaking.
Media studies has not paid much attention to the way economists think and talk.
Technological determinism - tech leads to social effect X. History of economics of information, however, was not radically changed by internet. Internet obviously had effects, but since 1930s the foundation of the economics of information has been in place.
Orthodox economics is roughly behaviorist, imitation of 19th century energy physics, does not look at motivation, information processing, because the models are too broad. Economists talk about the economics of information as a way to substitute for talking about individual cognition, allows them to use representative agents.
How smart is Homo Economicus? Smarter, dumber, or the same intelligence as an economist? Power struggle implications.
Can economists know more than the market knows?
The idea that economists didn't pay attention to information until the 1950s is common in economics but silly.
Some guy in media studies wrote a paper on why economists didn't pay attention to information until the 18th century. Historical factors, what changed that allowed the economists to innovate their theories?
Actually, a lot of the economics of information was not born in the 1950s, but was cribbed from other fields.
Information is given an inappropriately large role in thinking about economics.
Shannon information theory in late 1930s spreads throughout the social sciences, including economics, but in fields other than economics the hype dies down.
Neoclassical vs Neoliberal: NC since 1870s imitates physics, maximize utility etc. NeoLib begins in 1930s, separate thing. Neolib is associated with Hayek strongly. Hayek talks about information processing, elevates it to the central theoretical role in economics. Hayek is a bit of an outsider to neoclassicalism.
Hayek and co. create a kind of cognitive economics. Hayek argues that the market is not an allocation device so much as an information processing system. (Transcriber's question, why not both?) By the 50s Hayek's people reject the correspondence theory of the truth. Hayek's model of the brain is a projection of his model of capitalism, as above so below. Scoffs. Prices embody all relevant knowledge. Hayek hates German thought. Hayek gets simplified into: marketplace of ideas. Anyone discussing the marketplace of ideas is a neoliberal shill.
Hayek says knowledge is not centralized but decentralized in individual circumstances. Knowledge is incomplete sometimes contradictory. Economics is not about allocating resources, it's about getting good utilization of knowledge that is dispersed.
Economists back then were anti-psychology, didn't want to associate with psychologists. They also claimed that their theories assumed perfect knowledge. This was an attempt to keep their old models without responding substantively to Hayek.
Politics influenced economist's thought. The market is a more powerful information processor than anything else known to man.
Three line refutation of socialism: the market is smarter than you, you want to override the market, therefore centralized planning is bad.
Neoclassicals think they are socialists, so they want to respond to Hayek and refute the idea that people can't intervene on the market usefully.
Neoclassicals decide to appeal to science to discredit Hayek. They copy the natural sciences, take hints about how they should model information, work it into their pre existing theory. There were three approaches to this adaptation:
1. Information as though it were a tangible thing, it can be bought, sold, divided. Relies on a weird interpretation of Shannon information theory.
2. Information as epistemic logic, philosophy.
3. Information as computers, Turing machines, etc.
The crucial point: information depends crucially on the modeling choice because these different frameworks can't be translated into each other. Eg, 1. if information is an object, cognition is irrelevant, you can just buy information rather than learn.
Eg, 2. if information is a blackwell indicative index then communication is signalling. Big data is based on this. Eg, 3. If information is symbolic, computers, learning is augmentation of algorithms, communication is the transmission of these algorithms.
There's a group of economists at Kohl's commission that explore all of these models. Economists bounce around between models 1 2 3, the flaws in one lead them to one of the other two. Sometimes economists get hyped about game theory, Bayes. Sometimes economists talk about symbolic computation.
Economists follow Hayek and talk about how information is going to be used by the government bureaucrats.
Hayek changed his mind. Is information local or transportable? Is all knowledge tacit? Hayek says all knowledge is tacit, the market can use tacit knowledge but you can't use tacit knowledge.
Economists start thinking about knowledge as local, accessible, and move to thinking about knowledge as abstract, inaccessible, metaphysical. Hayek argues that information exists in the world that no one knows, and only the market can find. Scoffs. This idea seeps into orthodox economics.
Economists are antihumanist because they think that the specific details of individuals do not matter when trying to understand society, they use representative agents. Economists try to use markets to move information to fix problems that somehow move.
It's not Adam Smith anymore. The market is a collection of various information processors, not one overarching system of exchanges. Now economists argue that regulators should reconfigure markets. Economists are bound up with privatizing stuff sometimes. Economists fail to acknowledge that the market can be stupid. This is a total reversal. Went from seeing individual agents as omniscient to seeing the market as omniscient.
The change of economists' view of information changed the entirety of economic thinking.
Economists see their role as smart people who intervene to fix society. Economists don't just preach about the wonders of the market, now they try to control the markets and make markets do their bidding, whether those markets are serving government, corporations, whatever.
Concrete example:
Spectrum auctions. For electromagnetic auctions, economists have a story. At first, the market was bad, then economists came in with their auction system and fixed the market. But my research shows that every step of this story is wrong. Congress mandated many different things, like putting liscenses in the hands of discriminated groups, mandated spreading out the licenses to avoid markets. Game theorists are hired but games theorists don't all agree. Many different alternative auctions were proposed, no consensus existed. The game theorists were hired by various corporations, and surprise surprise their recommendations favored the companies that hired them. Therefore, the government decided to make their own entirely different auction proposal, ignore all their recommendations from economists, ignore the targets mandated by government like diversity etc, and focus on maximizing government revenue. (Of course, the auction didn't actually maximize government revenue. You can't do experiments on one time phenomena, so this can't be conclusively proven.)
Self summary:
1. Economists claim to talk in terms of welfare, but their agents have no cognition, what they know doesn't matter, therefore welfare doesn't matter.
2. It's not Adam Smith anymore. Markets are fractured, there are markets for X Y and Z.
3. Economists changed from high priests of markets to talking about a proliferation of different specific proposals. They pretend they have one single theory, but are lying and they have many different theories and pretend to have understood things in advance.
4. Finally, neoliberalism ignores thought and thinking.
Glad you appreciated the notes.
I actually was disappointed by the talk because it's so relentlessly critical. It is true that the assumptions economists use to talk about the real world are sometimes inaccurate and inadequate. Nevertheless, simplified or flawed assumptions are necessary to begin to get a handle on complicated real world problems. While there have been many times economists' rationality assumptions have led to bad decisions, there are also many times when those assumptions have been important to good decisionmaking. Criticizing other people's work is a lot easier than improving upon it. And if all you do is criticize something, it implies you have a biased view and fail to appreciate whatever its strengths might be.
Also, there is plenty of work being done by economists attempting to improve on the shortcomings of assumptions that are common in the field, and he doesn't acknowledge any of it. He paints everyone with the same brush.
I don't disagree with the idea that a lot of work in economics is flawed. But his tone is very arrogant and condemning, when I'm unconvinced he could do any better. Implicitly, he wants us to think that because economists' tools are wrong, his own personal ideas about how things should work are correct. But that's not a valid inference - he is not God. He doesn't have any kind of automatic knowledge about which policies are best. So using flawed tools is inevitable, although we should recognize their limitations and try to improve on them. Just pointing out that a tool is flawed does not earn him any significant respect from me, nor does it make me agree with his own political theories more.
Thanks for the notes, but I have to add a few criticisms of your critique, if you'll permit me.
"But his tone is very arrogant and condemning, when I'm unconvinced he could do any better."
Since when are we, or is someone, only permitted to criticize if they can actually do a better job(!). We could apply the same rules to your comment/critique: you're not allowed to criticize, because I'm unconvinced you could criticize neoliberalism any better. Sometimes there is no solution, and there is no better job that can be done.
"Also, there is plenty of work being done by economists attempting to improve on the shortcomings of assumptions that are common in the field, and he doesn't acknowledge any of it. He paints everyone with the same brush."
Painting everyone with the same brush is referring to practically, not literally, everybody in a group. I can show one particular example from experience with economists: I have brought up climate change - really, ecosystem collapse - with lots of economists. I have never met one that thought it was a serious problem. With no exception, they all believed that the market would solve the problem. The more competent economists who are attempting to improve on shortcomings, to whom you are referring, are not attempting to solve any of the key crises in any practical way. Climate change is a civilization threatening issue, and I have no experience of any economists who are treating it seriously. It is only another market opening to them and for them.
But, many thanks for the notes. I appreciate it.
@@the81kid when economists say "market would solve it" they are very likely referring to market as a pricing mechanism, a la richard Wolfe and market-socialism, and not "free-market" and "invisible hand" or other such tools of political rhetoric. It seems to me that when students of sociology talk to economists, they are talking about fundamentally different things. "Market-as-a-pricing-mechanism" doesnt say anything about how much governments can meddle with the markets in the form taxes, regulations and so on.
"Market" based measures such as a revenue neutral carbon tax+dividend schemes are endorsed by economists from across the spectrum as the most effective, immediate step that world governments can take. Its efficiency is not something that can be hand-waved away with rhetoric. The city of london had reduced its emissions in 2017 to the same levels as that of 1890 (And the dividended benifitted the poorest 70% of the population) When critical theorists and leftists of the first world decry such measures as "insufficient", "incremental", or "too little", those of us in the developing world have no choice but to wonder if such callous purity testing is ultimately based on the knowledge that in case of a climate calamity, those of you in the first world would recieve much better aid from your governments than us in the third world.
@@psd993
However you want to define it - the "free hand of the market" or "pricing mechanisms" - economists do not believe in the real world.
Two economists are locked in an empty basement. 15 minutes later, one of them opens a sandwich shop.
This is the world economists believe in. "Externalities" are this mysterious ether from which we can create "wealth". Every problem can be solved, every resource can be replaced, at the right price. It's faith, it's a religion. The ecosystem is collapsing, and economists don't think this is a problem, because we just need to let the market find the right price to fix it. And if it doesn't find the right price or fix it, then it can't have been a problem in the first place. This is the magical world of the economists.
@@the81kid so all the economists writing about climate, from national news channels, and columns, to UN reports are just a small minority and your anecdotal bullshit is "the real truth"?
powerful!
There really an obscure area here, market is a an all knowing entity, there's no market but markets imposed by economists and other agents, agents are dumb... all that together seems hard to reconcile.
Of course he speaks of having different theories and present them as one only... as a mean of cultural domination.
12:04 boom
14:03 made me laugh. sometimes it feels like behavioral economists are propagandists, not academics. thank you interesting talk
The speaker really doesn't understand Hayek, or maybe he does and just smears him for political purposes.
@CrabApples Bodaciously Bitter Fruit's he's obsessed with him but he clearly doesn't understand any of his points. He understands the version that he created in his head, I'll give him that.