Thinking Clearly About Collective Intelligence: A Conversation with Geoff Mulgan about his new book Big Mind — David Sloan Wilson interviews Geoff Mulgan

Knowing all of this has tremendous potential for recognizing collective intelligence in human life where it currently exists and socially constructing it where it is needed. However, most of what I have recounted is new, emerging only within the last two or three decades, and is often not reflected in the thinking of otherwise smart people on the subject of collective intelligence. In particular, there is a tendency to naively assume that collective intelligence emerges spontaneously from complex interactions, without requiring a process of selection at the level of the collective unit.

It was therefore with trepidation that I began reading Big Mind: How Collective Intelligence Can Change Our World, by Geoff Mulgan—founder of the think tank Demos, director of the UK Prime Minister’s Strategy Unit and head of policy under Tony Blair, and current chief executive of Nesta, the UK’s National Endowment for Science. That made him smart—but was he smart about collective intelligence from a modern evolutionary perspective?

To my delight, I found him very well informed, clearly recognizing that collective intelligence only exists under very special conditions, which makes it both present and absent in human life. In addition to his conceptual understanding, his book is filled with examples from his extensive policy experience that were previously unknown to me, along with practical advice about how to enhance collective intelligence where it does not already exist….

This View of Life
Thinking Clearly About Collective Intelligence: A Conversation with Geoff Mulgan about his new book Big Mind

David Sloan Wilson, SUNY Distinguished Professor of Biology and Anthropology at Binghamton University and Arne Næss Chair in Global Justice and the Environment at the University of Oslo. interviews Geoff Mulgan, Chief Executive of the National Endowment for Science Technology and the Arts (NESTA)

See also

Science Alert
Plants Are Better at Complex Decision-Making Than We Ever Realised

David Nield

Geoff Mulgan — Cognitive Economics: How Self-Organization and Collective Intelligence Works

The study of self-organizing groups points toward what could be called a cognitive economics.

Evonomics
Cognitive Economics: How Self-Organization and Collective Intelligence Works
Geoff Mulgan is chief executive of Nesta, the UK’s National Endowment for Science, Technology and the Arts, and a senior visiting scholar at Harvard University’s Ash Center

Miles Kimball — Cognitive Economics

Here is a link to my new working paper “Cognitive Economics” on the NBER website. (For those of you who don’t have access, here is a link to an ungated source for the paper, and here is the source Word document.) The working paper just came out yesterday. 

I expect “Cognitive Economics” to ultimately appear in a conference volume of the Japanese Economics Review and will update when I know more. 

This working paper is written in the same style as my more academic blog posts. So I count it as a major blog post as well as an NBER Working Paper. It just happens to be a blog post that you need to follow a link to see in full. (And sadly, like the typical blog post, despite diligent efforts, a few typos have crept through. The number and severity of typos I find will have to reach a certain critical threshold before I put the NBER staff to the work of putting together a new version. Please let me know if you find a typo)

Let me give you a bit of a preview, in the form of an outline with one or more key quotations from each section and subsection:

Confessions of a Supply Side Liberal
Cognitive Economics

Miles Kimball | Professor of Economics and Survey Research, University of Michigan

Dirk Ehnts — Neuroscientific foundations of microeconomics?

Cognitive science + economics = cognitive economics.

The classical (18 and 19th c.), Austrian (Mises), and neoclassical (Becker) views of rationality are contradicted by contemporary cognitive and behavioral science.

econoblog 101

Neuroscientific foundations of microeconomics?

Dirk Ehnts | Berlin School for Economics and Law

Randy Wray — A Meme for Money, Part 3: Framing the Alternative Approach

In Part 2 we looked at the mainstream framing of discussion about money and about the economy and society more generally. Following Lakoff, my argument is that framing is important and that so far orthodoxy is winning all of the important policy debates because it has the better framing. Policy is always and everywhere a moral issue—not merely an economic issue and certainly not a technical issue. To win policy debates, we must—like orthodoxy—engage the moral issues. We can take the higher moral ground.

New Economic Perspectives
A Meme for Money, Part 3: Framing the Alternative Approach
L. Randall Wray | Professor of Economics, UMKC

Comment here, there, or both. Randy does use comments for input.

Randy Wray — A Meme for Money, Part 1: Introduction

I assume that most people here are here because they are interested in MMT and therefore keep up on the major MMT blogs, so I only link to posts on those in cases that I deem must-reads. After completing his latest book, Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems, Randy Wray is beginning a new series on framing money that qualifies as a must-read. Comment here or there. You are welcome to post your comment at both.

New Economic Perspectives
A Meme for Money, Part 1: Introduction
L. Randall Wray | Professor of Economics, UMKC

Of course, I am very pleased with this, since I have been harping on framing for a long time and citing cognitive science about it. As Joe Firestone and others have, too. We need a compelling narrative to deliver the compelling reasoning.

Bloomberg — Bernanke to Economists: More Philosophy, Please

Bernanke gets it and tells economists to get it too. MMT economists already know this.

Read it at Bloomberg Businessweek | Global Economics
Bernanke to Economists: More Philosophy, Please
Brendan Greeley | Staff Writer

(h/t INET)

See also NEF | New Economics Foundation
The importance of measuring well-being
Juliet Michaelson
 | Senior Researcher, Centre for Well-Being

Douglass C. North — Economics and Cognitive Science

...Therefore the central questions that confront economists in cognitive science are not only how human beings learn and meld beliefs and preferences to reach decisions and hence the choices that underlie economic theory but also how and why do they develop theories in the face of pure uncertainty, what makes those theories spread amongst a population or die out, and why do humans believe in them and act upon them? In the remainder of this essay I intend to explore these issues in the expectation that down the road cognitive science may give us some definitive answers that can serve as the basis for major breakthroughs in economics and social sciences generally. In section II I shall complicate the neo-classical model with additional constraints that arise with imperfect information and uncertainty; section III will explore these issues over time; section IV will examine the nature of ideologies; and the final section (V) will explore the challenges these issues pose for cognitive science.

Economics and Cognitive Science
by Douglass C. North | Nobel Laureate in Economic Sciences (co-recipient 1993) and Spencer T. Olin Professor in Arts and Sciences at Washington University

Gilles Paquet — Evolutionary Cognitive Economics

Abstract: The paper reviews that limitations of the neo-classical economics paradigm in dealing with information: focus on individual rationality, static view of the world, unduly parsimonious characterization of the world of cognition. Then it sketches the contours of an alternative paradigm built on selective rationality, imperfect mental representations, cognitive structures as filters, and an adoption/adaptation dynamics: selection mechanisms adopting certain representations, rationales and conventions, but rules and patterns also adapting to the evolving milieu. The new evolutionary cognitive paradigm is shown to be pregnant with new insights into the structure and functioning of modern economies but also likely to generate some reformulation in our policy prescriptions

Evolutionary Cognitive Economics
by Gilles Paquet | Professor Emeritus at the School of Management and Senior Research Fellow at the Centre on Governance of the University of Ottawa

David Ingram and Michael Thompson — What's Your Risk Attitude?

Read it at Harvard Business Review | HBR Blog Network

What's Your Risk Attitude? (And How Does It Affect Your Company?)

by David Ingram and Michael Thompson

Mark Stein — A culture of mania: a psychoanalytic view of the incubation of the 2008

Abstract
In this theoretically informed study I explore the broader cultural changes that created the conditions for the credit crisis of 2008. Drawing on psychoanalysis and its application to organizational and social dynamics, I develop a theoretical framework around the notion of a manic culture, comprised of four aspects: denial; omnipotence; triumphalism; and over-activity. I then apply this to the credit crisis and argue that the events of 2008 were preceded by an incubation period lasting for over two decades during which a culture of mania developed. Then, focusing especially on the Japanese and South East Asia/LTCM crises, I argue that a series of major ruptures in capitalism during this incubation period served not as warnings, but as opportunities for a manic response, thereby dramatically increasing the risks involved. I also argue that this mania was triggered and strengthened by triumphant feelings in the West over the collapse of communism. I suggest therefore that this manic culture played a significant role in creating the conditions for the problems that led to the credit crisis.

Read it at SAGE
A culture of mania: a psychoanalytic view of the incubation of the 2008 credit crisis

by Mark Stein | School of Management, University of Leicester

How's that for "irrational exuberance"?

The paper is a free download in PDF.

Der Spiegel Interview with Daniel Kahneman

This is four part series, with each part quite short. There are also illustrations that are part of the article, available separately.

Kahneman's work in behavioral economics is transforming the economics profession by calling in question many key assumptions, for example, the concept of rationality that underlies the notion of a representative rational agent and rational expectations hypothesis, which along with the presumption of individualism, form that basis of pursuit of maximum utility as the driving motivator of homo economicus.

Kahneman's conclusions, along with those of cognitive scientists, not only question those assumptions but suggest that they are not a true representation of how people behave. It is a confirmation of Keynes's "animal spirits," in a way, but more carefully articulated and backed up with data derived from experiments

Read it at Der Spiegel
SPIEGEL Interview with Daniel Kahneman
(h/t Kevin Fathi via email)

Kahneman summarizes his book,Thinking, Fast and Slow (2011), in which he reports on his life's work in studying behavior. Wikipedia summarizes the book here, too.

Of course, Kahneman has generated considerable controversy. Jim Holt gives an overview in The New York Times, Two Brains Running (Nov. 25, 2011).

Kahneman's basic thesis is that there are two selves within each of us, although he cautions that this is just a useful fiction representing different mental functions. The first, of System 1, is the experiencing self, and the second, System 2, is the remembering self. Life is essentially remembrance of the past and projection of the future based on it, so the mental aspect that most people identify with is the remembering self.

The remembering self functions very differently from the experiencing self, and it is this dichotomy that leads to cognitive-emotional biases when the remembering self uses heuristics instead of rigorous logical reasoning based on facts to come to quick conclusions, which most people do most of the time. Rather surprisingly, the remembering self interprets experiences non-factually and not always logical. It seems that heuristics are preferred, even through often inexact, for reasons are explicable in terms of evolutionary theory.

There has been a great deal of work done on cognitive bias of late. The major cognitive biases are summarized here. Be warned, there are a lot of them.

As Kahneman notes, Buddhist meditators (and I would add, many others) attempt to disentangle the experiencing self from the remembering self and to identify with the experiencing self, which lives in the present rather than the past and future. To this I would also add, that the object of meditation is to discern the aspect of mind that experiences by observing the distinction between experiencer as subject and experienced as object.

When this has been accomplished, the task is to discover the nature of the experiencer independently of an object of experience. Finally, the objective is to stabilize this state in activity, so that both experiencing self and remembering self are recognized as changing states of mind, while one's true nature is unchanging, which is the definition of "absolute" as distinct from relative.

Now that meditation has been popularized and many people have been practicing various methods for some time, cognitive scientists are studying them to discover what effects this may have on brain function, subjective experience, and behavior. This is incorporated in the nascent field of consciousness studies.
______________________

Note: Adaptive preference for heuristics, bounded rationality, and social (cultural and institutional) influences, in addition to "cognitive noise" arising from the interaction of mind and environment, challenge the presumption that human decision-makers use rationality chiefly for optimization (max u). Kahneman focuses on preference for heuristics, Herbert A. Simon is the developer of bounded rationality. Social factors are investigated by psychology, sociology, anthropology, evolutionary theory, and institutionalism.

Anonymous: The Fable of “Moral Arithmetic”

Fun read. Excellent example of framing through metaphor. Definitely take a look if you are interested in a popularized and simplified presentation of a rather abstruse MMT point that works.

Read it at Naked Capitalism
Anonymous: The Fable of “Moral Arithmetic”
By Anonymous
Originally published at Global Economic Intersections
(h/t paul in the comments)

Interestingly, and predictably, many of the comments to this post at NC are about how the problem really, really is moral. Really.

I don't think that moral arguments can be dismissed out of hand. They are powerful arguments that influence the views of a whole lot of people in that they are norms that define the boundary conditions of a world view by providing criteria for evaluation.

George Lakoff makes the point that conservatives, especially, are driven by morality, and they often either ignore, deny, or misrepresent facts that contradict their moral principles. This is also true of radicals at the left extreme of the political spectrum. It is a sign of an ideologically driven mindset, along with the rejection of reasoning as decisive. Ultra-conservative rejection of the scientific enterprise is a case in point, as it the ultra-radical rejection of capitalism as having any value at all, which even Marx saw as extreme, admitting that the capitalism of his day was responsible for many people living a better life than previously in history.

According to Lakoff the center is constituted of people who are "bi-conceptual," their moral allegiance divided between left and right, holding some positions that are liberal and others conservative. People scoring toward the center of the political compass test are bi-conceptual. These are people that can be persuaded by moral arguments coupled with factual premises that argue for a moral position that fits the facts.

This is the challenge that popularizing MMT solutions presents. Many of these solutions, like a job guarantee, are deeply distastefully morally to many people, often because of conceptual biases. The challenge is to show how the solution is not only economically efficient and effective, which MMT does in terms of an operational description and the macro theory, but also the moral solution as well.

It should not be too difficult to argue against blaming people for their own unemployment for moral reasons when there are ten dogs and only nine bones, or blaming homeowners faced with default when 105 marbles are owed and there are only 100 marbles in the game. How can people be held morally responsible for circumstances beyond their control?

J. D. Alt — The (Semantic) Problem with MMT: An Exercise in Framing

This is really good, and timely, too, in light of recent discussion in the comments here.

The problem with framing is the key issues involving framing are moral (normative, prescriptive) rather than factual (empirical, descriptive), as George Lakoff never ceases emphasizing. So much so that a presentation that focuses on fact may for that reason alone lose the argument before it is even mounted, due to poor framing of the issue.

Read it at New Economic Perspectives
The (Semantic) Problem with MMT: An Exercise in Framing

by J. D. Alt

A problem here is that most people presume incorrectly that the currency issuer must fund itself, which is a contradiction. The illogic is based on false metaphor of government as big household or firm. This leads to the wrong notion that one's taxes are funding specific spending, even though taxes go into a general fund and it is not possible to establish precisely where one's taxes go anyway. But let's just assume that people can look up the percentage distribution of the budget and figure how their taxes were spent overall.

The truth is that taxes do not fund the currency issuer, but rather they make currency issuance possible by creating demand for the government's currency, and there by allow government to provision itself with real resources through spending of the currency it issues, as well as to fund through transfers in which there is no exchange.

The question then becomes what metaphor to use to replace the erroneous currency issuer is like a currency user metaphor that is current and has moral appeal by leading to the question, "Am I getting my money's worth from the taxes I am paying in terms how the government is disbursing it."

The obvious way to think about this is in terms of taxes paying for specific programs by funding them, using the analogy of personal spending and household and firm budgets and accounting.

The reality is that taxes do pay for all programs by making them possible, even though the taxes are not used specifically for funding in the way people falsely believe. Is there an appropriate metaphor for this that can be substituted for the wrong thinking that solves the framing problem by resolving the moral issue?

Mark Thoma — Fairness Matters for Efficiency

Prof. Thoma calls attention to the work of Professor Armin Falk of Bonn University — with a video of his INET presentation. Thoma's summary is short and important as a refutation of a simplistic view of rational expectations based on maximizing utility in the context of methodological individualism. Professor Falk's work demonstrates that humans are fundamentally social rather than individual, as methodological individualism assumes to be self-evident apriori. Empirically this isn't the case.

Read it at Economist's View

Fairness Matters for Efficiency
by Mark Thoma

How the political mind works

This leads Lakoff and Haidt to strongly reject what you might call the “Enlightenment model” for thinking about reasoning and persuasion, and leads Kahan to talk about motivated reasoning, rather than rational or objective reasoning. Once again, these thinkers are essentially agreeing that because morality biases us long before consciousness and reasoning set in, factual and logical argument are not at all a good way to get us to change our behavior and how we respond. 

This is also a point I made recently, noting how Republicans become more factually wrong with higher levels of education. Facts clearly don’t change their minds—if anything, they make matters worse! Lakoff, too, emphasizes how refuting a false conservative claim can actually reinforce it. And he doesn’t merely show why the Enlightenment mode of thinking is outdated; he also stresses that liberals are more wedded to it than conservatives, and this irrational rationalism lies at the root of many political failures on the left.

Read it at AlterNet
How the Right-Wing Brain Works and What That Means for Progressives

by Chris Mooney

While this article is chiefly about conservative values, it also talks about liberal values and the science underlying understanding them. 

Although Mooney doesn't discuss the relation of value systems and economics, the implications of the scientific findings are rather obvious. This article explains the cognitive-affective rationale explaining why liberal and conservative approaches to policy including economic policy are as they are.

Leo Foresta on reason and intuition

Almost all university departments and research institutes are now financed directly or indirectly by big business or governments entirely controlled by multinationals through their lobbies and networks.

A key point to grasp is that the mechanistic world vision suits big business, whereas the alternative holistic subtle vision does not.

Read it at Leo Foresta on spirituality and the global crisis

Physics shedding light on the crisis (Part I)

by Leo Foresta

Holism is an extremely important trend that has been developing in the mainstream since the Sixties, when Abraham Maslow successfully overthrew B. F. Skinner's behavioral approach to psychology and established, first, humanistic psychology and then transpersonal psychology. We have come a long way since then, baby, and many people have no clue about it. 

Holism is going to one the dominant trends in this century, and it will replace mechanism. Neoclassical economics is chiefly mechanistic and it will be replaced with a holistic economic paradigm, such as suggested by E. F. Schumacher and Kenneth Boulding.

It is important to distinguish between methodological individualism and ontological individualism, between methodological holism and ontological holism, and between methodological individualism and methodological holism. Adopting a methodology does not necessarily require adopting the corresponding ontology, but it is easy to conflate methodology and ontology if one is not careful.

See also:

Wray, L. Randall. "Kenneth Boulding's Reconstruction of Macroeconomics", Review of Social Economy, vol. LV (Winter 1997): 445-463.

Wray, L. Randall. "Kenneth Boulding's Grants Economics," Journal of Economic Issues, 28 (December 1994): 1205-1225.

Wray, L. Randall. "Boulding's Balloons: A Contribution to Monetary Theory," Journal of Economic Issues, 25 (March 1991): 1-20.