Thomas Piketty’s New Book — Ramanan

Piketty coins a new term, the "Brahmin left."

The Case for Concerted Action
Thomas Piketty’s New Book
V. Ramanan

The Sacrificial Rites of Capitalism We Don’t Talk About — Lynn Parramore

Lynn Parramore reviews Suprita Rajan's A Tale of Two Capitalisms, which is about the intersection of economics with anthropology and sociology and the distinction between homo economicus of economics and homo communis (aka homo socialis) of anthropology and sociology — and ethics.

Ethos (ἦθος, ἔθος; plurals: ethe, ἤθη; ethea, ἤθεα) is a Greek word originally meaning "accustomed place" (as in ἤθεα ἵππων "the habitats of horses", Iliad 6.511, 15.268),[2] "custom, habit", equivalent to Latin mores.

Ethos forms the root of ethikos (ἠθικός), meaning "moral, showing moral character".[3] As an adjective in the neuter plural form ta ethika (τὰ ἠθικά), used for the study of morals, it is the origin of the modern English word ethics.

In modern usage, ethos denotes the disposition, character, or fundamental values peculiar to a specific person, people, corporation, culture, or movement. — Wikipedia

The etymology of the term "ethics" reveals that it can be traced to the customs of a people and later morphs into the dual meaning of the spirit of a people and the character of an individual. From this emerges the contemporary meaning of "ethics" as both individual and social in terms of right action and community-approved behavior.

While an act may not be illegal, that is, contra to positive law, it may be unethical in terms of an unwritten "law" as a tradition. Thus, liberalism is permeated with traditionalism. This is often overlooked in the narrow interpretation of liberalism, as in "Well, I didn't break any laws" as exculpatory. That excuse doesn't fly with the public.

INET
The Sacrificial Rites of Capitalism We Don’t Talk About
Lynn Parramore, Senior Research Analyst

Crossposted at Naked Capitalism

Economic policies can reduce deaths of despair William H. Dow, Anna Godøy, Chris Lowenstein, Michael Reich

Policymakers and researchers have sought to understand the causes of and effective policy responses to recent increases in mortality due to alcohol, drugs, and suicide in the US. This column examines the role of the minimum wage and the earned income tax credit – the two most important policy levers for raising incomes for low-wage workers – as tools to combat these trends. It finds that both policies significantly reduce non-drug suicides among adults without a college degree, and that the effect is stronger among women. The findings point to the role of economic policies as important determinants of health.

Suggests the importance not only of welfare policy as a whole, but also one that includes a job guarantee compensated at a living wage in terms of wages and benefits.

VOX.eu

Economic policies can reduce deaths of despair
William H. Dow, Anna Godøy, Chris Lowenstein, Michael Reich

Robert Heilbroner — The Embarrassment of Economics: Weekend Reading

Robert Heilbroner hits it out of the park in this short article, originally a speech. It's a fun read, too.

Grasping Reality
Robert Heilbroner (1996): The Embarrassment of Economics: Weekend Reading
Brad DeLong | Professor of Economics, UCAL Berkeley

Giddens: We are suffering from ‘cosmopolitan overload’ and a huge task lies before us – to create responsible capitalism — Labinot Kunushevci Interviews Anthony Giddens

Giddens: We live in a world that has moved ‘off the edge of history’ at the same time as it remains deeply embedded in it. By this I mean that today we face risks that no other civilisation has to deal with – such as climate change, the massive growth in world population, or the existence of nuclear weapons. Some of these risks are existential: they are threats to the very continuity of the industrial order as it spreads across the face of the earth. We cannot say which are the ‘most threatening’, since the true level of risk is by definition unknown. There is no past time series to go on as there are with more traditional risks. 

At the same time we have opportunities, as collective humanity, that go massively beyond what was available in previous ages, not just for material advancement but for the spiritual enrichment of our lives. I call this a ‘high opportunity, high risk society’ – in which it is almost impossible in advance to know what the relation between these two factors will turn out to be. This problematic relationship is today an elemental part of the human condition. This is not a post-modern world in the sense in which that term is usually used – to refer to the dissolution of reason and of potentially universal values. Rather, a battle is being fought almost everywhere between such values and sectional divisions of various sorts.

Economic Sociology and Political Economy

Giddens: We are suffering from ‘cosmopolitan overload’ and a huge task lies before us – to create responsible capitalism
Labinot Kunushevci Interviews Anthony Giddens, Director of the London School of Economics 1997–2003, and now Emeritus Professor at the Department of Sociology

Daniel Little — Erik Olin Wright on real utopias

Erik Olin Wright is one of the genuinely important contributors to a progressive sociology in the United States. He was one of the first wave of social scientists and philosophers who created the movement of analytical Marxism in the 1970s and 1980s, and for more than thirty years he has organized much of his own thinking and the collaborations of a number of other scholars around the idea of a "real utopia." Essentially the idea is to make use of good social science research and theory to help to formulate visions of the future of society that incorporate an emancipatory vision of human community while imagining institutions and social arrangements that are feasible and attainable. Erik's book Envisioning Real Utopias provides a manifesto and extensive development of the ideas (link).

The general perspective that Wright has taken in the Real Utopias project is egalitarian and emancipatory. The project has focused on a number of key topics: universal basic income, market socialism, deliberative democracy, alternatives to capitalism, and gender equality, to name just a few. (Earlier posts on UnderstandingSociety have highlighted some of the goals of the real utopias project (link, link). Erik's webpage provides more details….

Understanding Society
Erik Olin Wright on real utopiasDaniel Little | Chancellor of the University of Michigan-Dearborn, Professor of Philosophy at UM-Dearborn and Professor of Sociology at UM-Ann Arbor

Vladimir Popov and Jomo Kwame Sundaram — Early Death in Russia

Sociological effects of economic change. Economic contraction results in social dysfunction that manifests negatively in individual lives.

The transition to market economy and democracy in the Russian Federation in the early 1990s dramatically increased mortality and shortened life expectancy. The steep upsurge in mortality and the decline in life expectancy in Russia are the largest ever recorded anywhere in peacetime in the absence of catastrophes such as war, plague or famine.

During 1987-1994, the Russian mortality rate increased by 60%, from 1.0% to 1.6%, while life expectancy went down from 70 to 64 years. Although life expectancy declined from 1987, when Mikhail Gorbachev was still in charge, its fall was sharpest during 1991-1994, i.e., during Boris Yeltsin’s early years.

In fact, mortality increased to levels never observed during the 1950s to the 1980s, i.e., for at least four decades. Even in the last years of Stalin’s rule (1950-1953), mortality rates were nearly half what they were in the first half of the 1990s.
Economic output fell by 45% during 1989-1998, while negative social indicators, such as the crime rate, murder rate, suicide rate and income inequalities, rose sharply as well, but even these alone cannot adequately explain the unprecedented mortality spike.

Yet, the Yeltsin period is represented as the "golden years" of Russia in the US, and the US elite is doing its best to return "the good old days" to Russia when "cowboy capitalism" ruled under the tutelage of the Harvard boyz, whose guiding principle was, "Let the market sort it out."

Vladimir Putin reversed the precipitous slide into system collapse and now the US elite thinks that his astronomical approval rating is the result of his control of Russian media, which he is running as a propaganda machine like Pravada was for the UUSR elite.

Meanwhile, the same syndrome begins to grip the US.

TripleCrisis
Early Death in Russia
Vladimir Popov and Jomo Kwame Sundaram

David F. Ruccio — White trash

Throughout U.S. history, class has always been there, if only just below the surface. But then in times of crisis, such as the aftermath of the crash of 2007-08 and during the Second Great Depression, class comes to the fore....

Occasional Links & Commentary
White trash
David F. Ruccio | Professor of Economics, University of Notre Dame

Daniel Luban — The Elusive Karl Polanyi

Karl Polanyi had thought of calling his magnum opus Origins of the Cataclysm, or The Liberal Utopia, or Freedom from Economics. His publisher, worried about the book’s marketability, instead gave it the title by which it eventually became famous: The Great Transformation. It was an ambiguous phrase. Readers might imagine that “the great transformation” refers to the history the book traces: the imposition, equally utopian and violent, of the market economy upon a recalcitrant society, spreading from England to encompass the globe and ultimately bringing on the collapse of world order in the twentieth century. But for Polanyi the great transformation lay not in the past but in the future. It referred not to the coming of market liberalism but of socialism, understood as “the tendency inherent in an industrial civilization to transcend the self-regulating market by consciously subordinating it to a democratic society.” And this transformation would be the culmination of the dynamic that he famously called the “double movement,” in which the ravages of the market inevitably lead society to “protect itself” against depredation....

Dissent — Spring 2017
The Elusive Karl Polanyi

Daniel Luban, postdoctoral associate in the humanities at Yale University

ht David Fields at Radical Political Economy

Oleg Komlik — Theodor Adorno on the division between economics and sociology

My thesis is quite simply that the strict division between economics and sociology, the consequence of which is unquestionably to dismiss the Marxian theory ante portas, causes the decisive social interests of both disciplines to disappear; and that precisely through this separation they both fail to assert their real interests, what really matters in them. […]
The economic relationships between people, though ostensibly of a purely economic, calculable nature, are in reality nothing but congealed interpersonal relationships. Sociology, on the other hand, in concerning itself only with relationships between people without paying too much attention to their objectified economic form, acts as if everything really depended on these interpersonal relationships or even on the opportunities open to social actions, and not on those mechanisms. What is lost in the gap between them—and this gap is to be understood not topologically, but as something really missing from the thought of both disciplines—is exactly that which was once referred to by the term ‘political economy’.” — Theodore Adorno,  Introduction to Sociology, edited by Christoph Godde and translated by Edmund Jephcott. Stanford, CA: Stanford University Press, 2000, 141-142.

Economic Sociology and Political Economy
Theodor Adorno on the division between economics and sociologyOleg Komlik | founder and editor-in-chief of the ES/PE, Chairman of the Junior Sociologists Network at the International Sociological Association, a PhD Candidate in Economic Sociology in the Department of Sociology and Anthropology at Ben-Gurion University, and a Lecturer in the School of Behavioral Sciences at the College of Management Academic Studies

Diane Coyle — Economy and society

It’s fair to say the average economist doesn’t pay much attention to sociologists, but to the extent that (s)he does, Mark Granovetter will be a familiar name. His concept of the distinct roles of ‘strong’ and ‘weak’ ties has become widely-cited in the economics literature. Now Granovetter, a Professor of Sociology at Stanford, has published a new book – intended as the first of two volumes – aiming at a synthesis of his views on how the economy and society are enmeshed with each other.

Society and Economy: Framework and Principles, sets out at a high level of abstraction definitions and relationships between concepts such as trust, power, norms, values, as they relate to economic decisions and actions....

The Enlightened Economist

Economy and society
Diane Coyle | freelance economist and a former advisor to the UK Treasury. She is a member of the UK Competition Commission and is acting Chairman of the BBC Trust, the governing body of the British Broadcasting Corporation

Noah Smith — Calling All Sociologists: America Needs You

Something I can agree with.

There are many more economists in the public sphere than sociologists. The president has a Council of Economic Advisers, but no Council of Sociological Advisers. Every presidential candidate has an economic team, but you never hear about a sociology team. There are government-run institutions like the World Bank, the International Monetary Fund and the Federal Reserve banks staffed with Ph.D. economists, but no such brain-trusts of sociologists.

In the media, economists such as Paul Krugman, my Bloomberg View colleague Tyler Cowen and others command large audiences and great intellectual respect. Nor are they unusual -- many economists blog, or write for important news outlets. As for sociologists, though a few do interact with the public -- for example, Tressie McMillan Cottom of Virginia Commonwealth University or Fabio Rojas of Indiana University-Bloomington -- most remain in the ivory tower.

That’s a shame, because, as Bloomberg reporter Brendan Greeley recently pointed out, more and more of America’s problems look sociological rather than economic.

It's a terrible mistake to see all issues as chiefly or exclusively economic, either in origin or solution.

What is a required is a system approach that is both trans-disciplinary (inclusive) and also meta-disciplinary (integrative). Economist Kenneth Boulding got this, for example, as did E. F. Schumacher. Karl Marx got it, too.

Here is what John Maynard Keynes had to say about it:

The study of economics does not seem to require any specialized gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy or pure science? An easy subject at which few excel! The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician. — J. M. Keynes "Alfred Marshall, 1842-1924" The Economic Journal, (Sept.,1924), 321-322

This goes not only for policy but also education. The disciplinary approach reflects the disjointed approach of methodological individualism that is fundamental to neoclassical based economics and the neoliberal political theory based on it. It's literally killing us.

Bloomberg View
Calling All Sociologists: America Needs You

Noah Smith

Whither Economics?

Noah Smith speculates.

Noahpinion

A new age of econ imperialism is coming
Noah Smith | Assistant Professor of Finance, Stony Brook University

Jason Smith replies.

Information Transfer Economics
Economic imperialism?
Jason Smith

Jason cites this previous blog in his reply above. If you aren't familiar with it, I suggest reading it. It's short.

He concludes with:

In my link above, there are some other things that give us more information. For example, in a d-dimensional beehive with d >> 1, nearly all the bees are near the surface, not the interior ... as long as they are not coordinated to be in the interior (say, by the queen).

When this separation holds, then economics is more like physics. When it doesn't, economics is a social science.

If the details of the complexity of bee social structure strongly mattered, it would (likely) be impossible to figure out how much honey you could get from N bees [per capita real GDP]. Now humans are more complicated than bees, but the same principle -- that the macro properties are mostly governed by the bulk properties of the available state space -- has to apply if macro is tractable. And if it's not tractable (a possibility), then it really should just be moral and historical arguments.

I think that this probably puts a finger on the nub of it. Macro models work when trends are relatively stable but break down when they become unstable, that is, especially at cyclical turning points.  But turning points are what is most interesting and needs to be known for policy formulation.

This what Keynes meant when he said that in the long run will all be dead. What good does assuming equilibrium mean when a time series involving employment can persist in pattern in which the labor market doesn't clear for an extended period. Where there is debt, waiting it out is not a option.

Another way of putting it relying on mean reversion in markets may be a good strategy for those with deep pockets but many if not most participants don't have pockets that deep and the leveraged will become insolvent.

Macro can illuminate some consistencies in the behavior of aggregates, but experienced traders know the limitations of trend following.

One issue is that humans are not like atoms; they are subject to "animal spirits" that affect expectations and result in shifting preferences, in particular liquidity preference. The other issue is the influence of money. Conventional economics assumes that money is neutral "in the long run." Again, in the long run we are all dead, or deadbeats, since most households and firms are leveraged in one way other another.

Money as the unit of account is key in economics because economic aggregates are expressed in terms of the unit of account. To the degree that money is not neutral, it influences the system endogenously. This is something that conventional economics has not come to terms with, while Paleo and Post Keynesianism do.

Peter Turchin — Naked Self-Interest is a Recipe for Social Dissolution (a response to Branko Milanovic)

Must-read.

Cliodynamica — A Blog about the Evolution of Civilizations
Naked Self-Interest is a Recipe for Social Dissolution (a response to Branko Milanovic)
Peter Turchin | Professor in the Department of Ecology and Evolutionary Biology at the University of Connecticut; Research Associate in the School of Anthropology, University of Oxford; and Vice-President of the Evolution Institute
ht Yves Smith at Naked Capitalism

See also John Maynard Keynes, The end of laissez-faire (1926)

This essay, which was published as a pamphlet by the Hogarth Press in July 1926, was based on the Sidney Ball Lecture given by Keynes at Oxford in November 1924 and on a lecture given by him at the University of Berlin in June 1926.

Also

Robert Frank: Ruthless self interest is not a good business strategy (a guest post)
Robert H. Frank is the Henrietta Johnson Louis Professor of Management and a Professor of Economics at the Samuel Curtis Johnson Graduate School of Management at Cornell University

Herbert Gintis: Societies whose business leaders have moral integrity are successful societies (a guest blog)

Herbert Gintis, Professor, Santa Fe Institute, Professor, Central European University, Economics,Emeritus Professor, University of Massachusetts, Economics

Branko Milanovic: The Iron Logic of Gordon Gekko (a guest post)
Branko Milanovic, formerly lead economist in the World Bank’s research department and currently is visiting presidential professor at City University of New York Graduate Center and an affiliated senior scholar at the Luxembourg Income Study

Polina Aronson — Romantic regimes

Love in the West is consumerist – we choose a partner to give us what we think we need. But Russians do things differently.

Weekend reading. More on what it means to be "rational" and "irrational," and why rational choice theory's assumption a homogenous "human nature" is simplistic, reflected in different ways of choosing a mate.

Aeon Magazine
Romantic regimes
Polina Aronson, Russian Writer and a lecturer in sociology at the Alice Salomon University of Applied Sciences in Berlin

Max Weber on power as institutional

LAW exists when there is a probability that an order will be upheld by a specific staff of men who will use physical or psychical compulsion with the intention of obtaining conformity with the order, or of inflicting sanctions for infringement of it. The structure of every legal order directly influences the distribution of power, economic or otherwise, within its respective community. This is true of all legal orders and not only that of the state. In general, we understand by "power" the chance of a man or of a number of men to realize their own will in a communal action even against the resistance of others who are participating in the action.…

Max Weber
Class, Status, Party
Translated and Edited by H. H. Gerth and C. Wright Mills
Politics, October 1944, pp. 271

Matt Bruenig — Institutions Matter Except When They Are Socialist

Robert Solow once remarked:

Every discussion among economists of the relatively slow growth of the British economy compared with the Continental economies ends up in a blaze of amateur sociology.

This is the final move of right-wing economists whenever the assumptions of their ideologically-infused policy prescriptions end up contradicted by observed reality. After a few forays into some exotic economic indicators, they eventually propose strange half-assed sociological theories that, quite remarkably, end up concluding that laissez-faire capitalism is still definitely the way to go....

My only argument with Bruenig is that in conventional economics, institutions don't matter, only individuals do, that is, the representative individual. Institutions are socialist.

Oh, and Piketty's work shoes that inequality in core European nations would be worse than the US if it were not for social democracy. This is what the neoliberal eurocrats are trying to "fix."

Matt Bruenig
Institutions Matter Except When They Are Socialist

Jason Smith — Managing by wandering around

Must-read by Jason Smith. It's fun.

Information Transfer Economics
Managing by wandering around

Jason Smith

Oleg Komlik — Emile Durkheim’s definition of Economic Sociology

Institutional analysis.

Economic Sociology and Political Economy
Emile Durkheim’s definition of Economic Sociology
Oleg Komlik | founder and editor-in-chief of the ES/PE, Chairman of the Junior Sociologists Network at the International Sociological Association, a PhD Candidate in Economic Sociology in the Department of Sociology and Anthropology at Ben-Gurion University, and a Lecturer in the School of Behavioral Sciences at the College of Management Academic Studies

Dirk Ehnts — Money – a legal, not an economic thing

I have recently read a paper by Christine Desan that is titled Money as a legal institution. The author argues that money is a legal thing, that it is defined by laws and that the law is changed in times of crisis. I very much agree with that. Economists have been so bad at understanding money because it is not their field of comparative advantage. Anthropologists have long doubted that money arose from “coincidence of wants”, and David Graebers 5,000 year history of debt has been read by so many economists that nobody can deny anymore that the story that modern textbooks tell us is wrong. Money is a legal entity. Bill Mitchell writes about money:…

Short and to the point. Read it all. What economics is missing.

econoblog 101
Money – a legal, not an economic thing
Dirk Ehnts | Berlin School for Economics and Law