Savitri Era of those who adore, Om Sri Aurobindo and The Mother.

Friday, July 29, 2011

Complex economy and million mutinies


On the complexity of society and social sciences – here’s my latest column in the Pittsburgh Tribune-Review. by Don Boudreaux. Reality is like that. It's complex. The economy is especially so. [...]
The zillions of decisions made daily by the billions of people in today's global economy simply cannot be predicted -- and the detailed consequences of these decisions cannot be predicted -- with the kind of precision that we take for granted in many of the natural sciences. So any economist worth his or her salary will qualify any prediction of the future -- and qualify any explanation of the past -- with the recognition that other predictions and explanations also have potential merit.
Economists cannot avoid the large amounts of uncertainty and imprecision that make economics unsatisfying to people, such as Truman, who demand simple and unambiguous answers. But because there's a large demand -- especially among politicians -- for simple and unambiguous answers, there's no shortage of people willing to supply such answers. Read more: Not so simple - Pittsburgh Tribune-Review 

Harold Macmillan, British Prime Minister, was asked what he feared most during his time in office. “Events, dear boy, Events,” was his answer. David Cameron, his ninth successor as PM, would agree. What has now hit Britain, a “firestorm” as he called it, did not even begin with Murdoch.

Deirdre McCloskey’s new book, Bourgeois Dignity: Why economics can’t explain the modern world, reveals that the West rose after 1800 not only because of economic factors but also because the discourse about markets, enterprise, and innovation changed. People became enthusiastic and encouraging of entrepreneurs. The development of the West is explained not as much by colonialism and imperialism; not by Marx’s theory of classes; not by Max Weber and his Protestant ethic; not even by Douglass North and the central role of institutions. It has much more to do with how people’s perceptions and expectations changed.
Robert Lucas, the Nobel Prize winner, says that ‘for income growth to occur in a society, a large fraction of people must experience changes in the possible lives they imagine for themselves and their children…economic development requires a million mutinies’. There are still vast areas of horrible poverty and deprivation in India but there is also a critical mass of people who can see that their lot is palpably better than their parents; their future is open, not pre-determined, and can be changed by their own actions. They feel that dignity is being bestowed on their middle class dreams as their children are getting MBAs and aspire to become CEOs. Ordinary conversations over chai and chaat are about markets and innovation. Even leftist theorists at JNU and in the Congress Party have been forced to rethink their old prejudices. What has changed is ‘habits of the mind’ as India has become a ‘business respecting civilization’ in Schumpeter’s words.]

History is a mixture of perception and propaganda that confuses some of the fundamental elements of humanity.
As a pack animal, the human needs to associate with the pack. That may be the family group, the extended family, the religious faction, the political faction, the nation or the supra-nation. From that group, other groups are viewed, the perception of those other groups will not recognize all of the elements of those groups and it is almost guaranteed that the self-perception of any group will be different from the perception of that group by other groups.
Within a commercial organization, those negative instincts develop a new divided structure of sales, administration, production, research, etc. as workers in each discipline group together. People associate by their dress and behaviour in new packs. A corporation will prosper by encouraging all employees to consider the corporation as the framework of the pack, but this is still a competitive pack that sees other corporations as the enemy.
Against this natural pack instinct, humans have an ability to imagine and to develop an awareness that transcends brutal animal instincts. Individuals reaching a higher understanding can stand for their beliefs and bring about positive change but always risk the collection of similar understandings into a new religion that can be subverted by those who always seek to control others and to decide what is true and acceptable on behalf of millions of followers.
Any individual, within a group, will hold unique perceptions of all around and that perception will be contained by the society of the group. From time to time, the negative perceptions of the individual will break free from the constraints of society as it has just done so tragically in Norway. From time to time the positive perceptions of an individual will break free from the constraints of society and bring positive changes to that society and perhaps to a much wider group.

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