Wolfgang Streeck on the seduction of power

The Régulation Review. Capitalism, Institutions, Power is an international, peer-reviewed, JEL-refereed, econlit-listed journal.

That is what I found from its website. It published an interview with Wolfgang Streeck in July. You can find the interview here.

Some of his interesting remarks:

All of this came relatively late, due to a peculiar “habit” of mine, which is that I can appropriate theory only with a concrete empirical problem before my eyes, or confronting a puzzling image of the real world. I am hungry for facts, not for concepts; concepts I access through facts and through the questions they raise, including the need to organize them into a coherent picture.

I could see myself in that answer.

In a very crude way, one could say: a socioeconomic formation that combined high manufacturing performance with relatively high social egalitarianism has given way to a configuration that combines high manufacturing performance in a shrinking manufacturing sector with rapidly increasing inequality.

That is a good summary of how the global economy has evolved in recent decades.

In fact, what TTIP and similar arrangements are about is replacing public, political and at least potentially democratic institutions with private, commercial, contractual ones, or one could also say: replacing sovereign authority with liberal markets, or state power with market power. After all that is what liberalization is all about.

Behavioral economics means laboratory experiments designed to test assumed general, ahistorical, essentially biologically anchored human dispositions to act. Behind it is a stimulus response model of action that is so general that it can be discovered by testing no more than twenty or thirty graduate students who are paid euros for their participation. To me this kind of research may fit other animals but it certainly does not fit humans – who are, according to Darwin (!), moral animals that can and must distinguish between good and bad, right and wrong. At the human level, differences matter. Also, I detest the biologistic rehabilitation of rational choice that is behind most of behavioral economics: people are “shown” to act “non-rationally”, which for behavioral economists is the same as “altruistically”, but it is assumed that this is genetically programmed, which means that it must functional for the survival of the species and the selection of the fittest, and therefore is rational after all. This is so primitive that one need not comment about it.

What matters at the level of human action, of human society and of human history is precisely the vastly different ways in which our common biological endowment, whatever it may be and highly plastic as it is, is shaped and expressed in different historical cultures and social contexts. Nelson Mandela and Heinrich Himmler both were humans and had the same genetic endowment; but this is obviously much less important than what they and their environment made out of it and what their social context enabled, allowed and encouraged them to do or failed to prevent them from doing.

I think he is being too harsh on behavioural economics. I am not sure that behavioural economics tries to deny the role of the interaction of humans with their society and how the history of the societal evolution and the current context shape them. I do not think that behavioural economics contradicts that.

As far as I have understood behavioural scientists like Dan Ariely or Daniel Kahneman, they are not trying to ‘rationalise’ human behaviour as much as they point out the fallacies of the assumptions of the neo-classical economic growth model. But, the danger in going too far with it is that if people do not know what their preferences are, let somebody else (the government) choose them for the people! That would overlook the fact that those making the preferences for others are also humans! The whole thing gets circular and I am not sure if the answer is anarchy or something close to that. Or, perhaps, is that what we have today?

There is, as I said, no way around telling a good story, like a good historian but with the ambition of uncovering a “logic” underlying what you believe you are seeing, whatever it may be. In some ways this is similar to how an evolutionary biologist would tell the natural history of a habitat or of a species: you assemble all the facts you can find, bring to bear on them what you have learned from similar cases, help yourself from the toolkit of “ideal types” assembled during the history of your discipline, apply the general principles you believe are pertinent, and then do what scientists do: identify a pattern that gives meaning to what you see at the surface.

Pattern recognition is a matter of intelligence, intuition, and experience. Can you ever be sure the pattern you find is really there and is the “relevant” one? Never. But if and when you are sufficiently confident that what you have found can stand, at least for a while, you can release it for others to inspect it and wait what they have to say and, more importantly, if it helps them get ahead in their efforts. Scientific progress is a collective product, not an individual one, and it depends on people taking a risk with their work treating it as an investment in their own reputation and in collective cognitive progress at the same time.

Science has an entrepreneurial element to it: I throw something into the open and hope that it will make a splash. If not, try again. Intuition, responsible and enlightened guesswork, well nuanced verbal interpretation, and not least personal risk-taking are at the heart of the scientific enterprise; tacit skills and experience and “character” top methodological sophistication – social science is a human activity, not a truth-producing machine.

That is one of the best responses I have seen on how knowledge in a society evolves and progresses. He turns the notions of argument and  debate on their heads by calling scientific progress a collective product, an entrepreneurial  venture. Brilliant.

Fundamentally, I believe that a social scientist or economist who is asked by the elected government of his or her country to help with the making of policy should not on principle refuse. If what is expected appears ethically and politically supportable one may even have a duty not to say no. Of course, if emerging results turn out to be incompatible with your convictions you must step back or let yourself be fired.

Power is of course always seductive for someone who is, or was, a homo politicus; but one should give in to the seduction only if there is a real possibility to get something worthwhile done. Today, of course, nobody would ask someone like me to get involved, for the very reasons you mention.

There is much to discuss and think about his answer here. He says it is ok to succumb to the seduction of power if one could get something worthwhile done. That is almost ‘Nishkaamya Karma’. Does it stop there or can it?

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