Declaration of war by FOE against financial institutions
From stop-imf mailing list [EMAIL PROTECTED] http://lists.essential.org/mailman/listinfo/stop-imf The following ringing declaration challenging the social license of financial institutions to operate, globally, is drafted with a desire to attract the signature of other organisations. Can any of you pass it on? --PLEASE FORWARD-- ORGANIZATIONAL SIGN-ONS NEEDED INTERNATIONAL DECLARATION CALLING FOR BIG BANKS AND INVESTORS TO SUPPORT PEOPLE OVER PROFITS! This statement was drafted by an international group of NGOs campaigning on investment banks. It represents one of the first broad-based calls for private financial institutions (big banks, investment funds, etc.) to put people before profit; and it challenges them to take responsbility for their role in the debt crisis, in funding controverisal projects, and in backing the Bretton Woods Institutions' neo-liberal economic agenda. It will be launched at World Econnomic Forum in Davos, Switzerland on January 27, 2003. To sign on, send an email with your organization and country to [EMAIL PROTECTED] by 25 January 2003. To see concrete steps that financial institutions can take to implement this declaration, go to www.foe.org/camps/intl/declaration.html. * COLLEVECCHIO DECLARATION ON FINANCIAL INSTITUTIONS AND SUSTAINABILITY Financial institutions (FIs) such as banks and asset managers can and must play a positive role in advancing environmental and social sustainability. This declaration calls on FIs to embrace six commitments which reflect civil society's expectations of the role and responsibilities of the financial services sector in fostering sustainability. The following civil society organizations call on FIs to embrace the following commitments, and take immediate steps to implement them as a way for FIs to retain their social license to operate. The Role and Responsibility of Financial Institutions The financial sector's role of facilitating and managing capital is important; and finance, like communications or technology, is not inherently at odds with sustainability. However, in the current context of globalization, financial institutions (FIs) play key roles in channeling financial flows, creating financial markets and influencing international policies in ways that are too often unaccountable to citizens, and harmful to the environment, human rights, and social equity. Although the most well-known cases of resource misallocation in the financial sector have been associated with the high tech and telecom bubbles, FIs have played a role in irresponsibly channeling money to unethical companies, corrupt governments, and egregious projects. In the Global South, FIs' increasing role in development finance has meant that they bear significant responsibility for international financial crises, and the crushing burden of developing country debt. However, most FIs do not accept responsibility for the environmental and social harm created by their transactions, even though they may be eager to take credit for the economic development and benefits derived from their services. And relatively few FIs, in their role as creditors, analysts, underwriters, advisers, or investors effectively use their power to deliberately channel finance into sustainable enterprises, or encourage their clients to embrace sustainability. Similarly, the vast majority of FIs do not play a proactive role in creating financial markets that value communities and the environment. As companies FIs concentrate on maximizing shareholder value, while as financiers they seek to maximize profit; this dual role means that FIs have played a pivotal role in creating financial markets that predominantly value short-term returns. These brief time horizons create intense pressure for companies to put short-term profits before longer-term sustainability goals, such as social stability and ecological health. Finally, through the work of international public policy bodies such as the Bretton Woods institutions, the power of FIs has increasingly expanded as countries have deregulated, liberalized, and privatized their economies and financial markets. Financial institutions have not only actively promoted these policies and processes, but they have benefited from them through increased profit and influence. In too many cases, FIs have unfairly benefited at the expense of communities and the environment. For example, during financial crises, many FIs charged high risk premiums to indebted countries, while at the same time benefiting from public bail-outs. Some FIs have spoken out against innovative solutions to the debt crisis, such as the sovereign-debt restructuring processes proposed by civil society groups and now being discussed in the International Monetary Fund. And FIs' voices have been absent in efforts to address tax havens, a problem that blocks progress towards equity
RE: women and world financial institutions
Vikash Yadav wrote: The IMF/WB Board of Governors Executive Board are appointed by their member countries. Board positions are not filled through recruitment and internal promotion. Ian wrote: I wonder how Ann Krueger feels about this? Michael Perelman wrote: Is the question whether the number of women makes a difference or should it be the style that women have to adopt to succeed? Is the world better off from Margaret Thatcher or Golda Meir or Madeline Albright? Is gender a good indicator of behavior. A stronger argument might be that if insitutions opened up to different types, the prevailing style of behavior might change. I think of the ambiguities of The Good Woman of Szechuan, where the heroine gets money and has to adopt a different face. Thanks for the great thoughts. I may be mistaken but isn't recruitment a process to augment a body with new members. If the IMF and World Bank allow countries to appoint/select their own Governors and Directors, isn't that in a sense the recruitment process for the upper level? I think taking a broader definition of recruitment, WEDO focuses on the importance of the numbers. I agree that different types are clearly needed in theses institutions. But how will it happen on its own? Bringing new members on board with most of the in group attributes except for perhaps one out group member feature is a starting point...but ultimately the numbers will be needed for true representation. Joseph Stiglitz, as Chief Economist at the World Bank, has shown that he is a slightly different type than the usual IMF/World Banks elites from all the in groups, but whenever he opened his mouth to speak he was always under pressure to keep quiet and go with the flow. He was frustrated and eventually resigned in protest. Why? Because the numbers do matter and they mattered for Stiglitz's effectiveness. If there are enough different types one may not then have to adopt a different face like The Good Woman of Szechuan or perhaps Mamphela Ramphele and Anne Krueger. Yours, Diane
Re: RE: women and world financial institutions
Is the question whether the number of women makes a difference or should it be the style that women have to adopt to succeed? Is the world better off from Margaret Thatcher or Golda Meir or Madeline Albright? Is gender a good indicator of behavior. A stronger argument might be that if insitutions opened up to different types, the prevailing style of behavior might change. I think of the ambiguities of The Good Woman of Szechuan, where the heroine gets money and has to adopt a different face. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
women and world financial institutions
Analysis of Women In World Financial Institutions Please circulate all or the main part of the following: The US-based group WEDO (Women's Environment Development Organisation - www.wedo.org) have issued a Gender breakdown of top posts at the world's financial institutions. The clear point WEDO makes is that 'gender blind' recruitment practices are not only NOT a virtue, they actively enhance the grip of the minority sex, a point most men fail to understand. Boards of Governors International Monetary Fund: men 97.8% women 2.2% World Bank: men 94.5% women 5.5% Boards of Directors International Monetary Fund:men 100% women (guess) World Bank:men 91.7% women 8.3% Despite repeated requests from WEDO, the World Trade Organisation refused to supply any data. Info on this welcome to - [EMAIL PROTECTED] The above institutions are in theory in existence to help narrow the gap between the world's poor and the better-off. Here is the breakdown of the world's poor: men 30% women 70% For further information please contact Doris Mpoumou at WEDO's Gender Governance Program. [EMAIL PROTECTED] ---end- Eyecatcher's Senior Partner Lesley Abdela believes there is a direct causal relationship between an overwhelming number of one sex at the top of the world's financial institutions and the fact that more than 2/3rds of the world's poor are female, just as it could well be that women, democracy, society and the economy are badly served by legislatures that are overwhelmingly male. A survey in The Economist March 16 2002 showed that women were in near-balance in the parliaments of Sweden (43%), Denmark, Netherlands and Germany, and almost non-existent in the parliaments of Egypt (2%) and Turkey (5%). - An Eyecatcher Associates Public Service information release Eyecatcher Research Training United Kingdom Tel. +44 (0) 1892 891 106 [EMAIL PROTECTED] http://www.shevolution.com
Re: women and world financial institutions
- Original Message - From: Diane Monaco [EMAIL PROTECTED] Analysis of Women In World Financial Institutions = I wonder how Ann Krueger feels about this? Ian
RE: women and world financial institutions
The IMF/WB Board of Governors Executive Board are appointed by their member countries. Board positions are not filled through recruitment and internal promotion. As I understand it, the Governors at the IMF/WB are usually the Finance Minister/Treasury Secretary or Central Bank Governor of their member country. Executive Directors are usually drawn from a country's civil service or elite economists. In essence, these are political appointments by (the legislative/executive branch of) sovereign states. The actual staffs of the Bretton Woods institutions are not eligible for appointments or promotions into the Board of Governor or Executive Board. Thus, the gender imbalance discussed by WEDO is not really about recruiting policies in the IMF/WB so much as the appointment decisions of individual member countries. Changes in these positions must be carried out through pressure at the state level. It would be more appropriate to look at the officers of the IMF/WB staff if one is interested to examine the glass-ceiling problem. In the IMF, there are 6 women filling 33 of the officer slots. It should also be noted in all fairness that an American woman, Anne Krueger is the First Deputy Managing Director of the IMF. The influence of the Managing Director and Deputy Managing Director at these institutions is quite substantial and should not be discounted. On the World Bank end, one of the four Managing Directors is Dr. Mamphela Ramphele of South Africa (I think). Five of the 31 key positions are occupied by women. I agree that women should have far greater representation in these organizations at all levels, but it would be more effective if the e-mail by WEDO promoting such changes reflected a better understanding of the organizational structure of these intergovernmental institutions. Best, Vikash Yadav Philadelphia, PA -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]On Behalf Of Diane Monaco Sent: Thursday, April 25, 2002 09:43 PM To: [EMAIL PROTECTED]; [EMAIL PROTECTED]; [EMAIL PROTECTED]; [EMAIL PROTECTED]; [EMAIL PROTECTED]; [EMAIL PROTECTED]; [EMAIL PROTECTED] Subject: women and world financial institutions Analysis of Women In World Financial Institutions Please circulate all or the main part of the following: The US-based group WEDO (Women's Environment Development Organisation - www.wedo.org) have issued a Gender breakdown of top posts at the world's financial institutions. The clear point WEDO makes is that 'gender blind' recruitment practices are not only NOT a virtue, they actively enhance the grip of the minority sex, a point most men fail to understand. Boards of Governors International Monetary Fund: men 97.8% women 2.2% World Bank: men 94.5% women 5.5% Boards of Directors International Monetary Fund:men 100% women (guess) World Bank:men 91.7% women 8.3% Despite repeated requests from WEDO, the World Trade Organisation refused to supply any data. Info on this welcome to - [EMAIL PROTECTED] The above institutions are in theory in existence to help narrow the gap between the world's poor and the better-off. Here is the breakdown of the world's poor: men 30% women 70% For further information please contact Doris Mpoumou at WEDO's Gender Governance Program. [EMAIL PROTECTED] ---end-
Hedge funds lure Japanese institutions
The Financial Express February 09, 2002 Hedge funds lure Japanese institutions Tokyo, February 8: Japanese institutional investors, frustrated by a lack of investment opportunities at home, almost doubled their investment in high-risk international hedge funds in 2001 and are expected to be big customers again this year. Big institutions have poured money into hedge funds as they have struggled to get decent returns at home because of steep falls in share prices and the thinnest return on bonds, said Hidenao Miyajima of Nomura Securities' Financial Research Center. Hedge fund investment by Japanese institutions with liquid assets of over 100 billion yen ($747.8 million) doubled to 1.75 trillion yen ($13.09 billion) in 2001 from 880 billion yen in 2000, according to a survey by the research house. The investment volume was five times higher than in 1997 when it totaled just 350 billion yen. The pace of the investment might slow a bit this year as some big institutions are already exposed to as much high-risk as they can be under their prudential arrangements. Still, the overall shift is expected to continue as more institutions turn to riskier investments to reap returns. I still expect an annual growth rate of 20-30 per cent because there are smaller institutions that have recently got keen on hedge funds, Miyajima said. Hedge funds are loosely regulated investment pools reserved for clients with over $1 million for whom managers take risks with the aim of maximising absolute returns. About 5,000 hedge funds are in operation, holding an estimated $500 billion in global assets. Hedge funds posted positive overall results in 2001 but average returns were nowhere near the out-sized gains witnessed in 1999 when returns of more than 30 per cent were common. According to Hedge Fund Research, a US hedge fund analysis firm, the average return in 2001 was 4.73 per cent -- the third worst performance in history. In 1998 returns averaged 2.62 per cent when hedge fund Long Term Capital Management collapsed in a spectacular heap. In 1994, when California's Orange County went bankrupt after its investment pool blew up, returns came in at 4.10 per cent. But performance last year still beat hard-hit global stockmarkets. The US Standard Poor's 500 index dropped 13 per cent last year while the Nasdaq Composite index fell 21.1 per cent. Wariness among many investors towards hedge funds appears to have deepened, however. Among the factors that could dampen Japanese enthusiasm for taking long-odd bets is the poor performance of US pension funds, which are heavily exposed to hedge funds. Hit by the collapse of Enron and weak equity markets, assets of US pension funds shrank by 14 per cent last year, according to Pensions and Investments, a magazine that tracks the funds. There are questions too about the accuracy of those jaw-dropping returns. A study titled Welcome to the Dark Side by University of Reading academics Chris Brooks and Harry Kat says the overall performance of hedge funds is overstated because a high level of attrition among the funds is not represented in various indices. With 30 per cent of newly-created hedge funds not surviving the first three years, not including defunct funds may lead to over-estimation of true returns, the study said. A global fund manager at a Japanese insurance firm also questioned the accuracy of some performance reports. - Reuters 2002: Indian Express Newspapers (Bombay) Ltd. All rights reserved throughout the world.
Stealing the State: Control and Collapse in Soviet Institutions
http://www.law.nyu.edu/eecr/vol8num1-2/reviews/liebich.html
Re: Re: Progressive Information Aggregation Institutions?
\Robin Hanson wrote: The question is how to choose, on matters of fact as opposed to value, when disagreement persists, even after substantial discourse. Whose estimate should determine actions? A vote among everyone? A vote among a random jury? Administrative agency experts? A panel of distinguished academics? My proposal was to use the estimate of a betting market. I responded: a vote among everyone seems needed to decide general principles. Experts and academics can advise the voters. Votes among those most affected seem appropriate for specific cases, under the rules set by general principles. A betting market encourages people to compete instead of working together on these issues, which is an error when external costs and benefits are so prevalent. Robin answered: I don't think we're communicating. yes, since I wasn't really paying attention. The topic is matters of fact, not value. Such as estimating whether OJ did it, how high sea levels will rise if CO2 emissions are or are not curtailed, or the effect of NAFTA on US unemployment. The question is what the general principles should be for such specific cases (what would you vote for?). I'm not sure that issues of fact and value can always be separated in practice (even though it's a good idea to do so). After all, the fact that most White folks here on the Westside of L.A. think that OJ did it while most Black folks in L.A. think of him as innocent suggests that issues of values have clouded judgements of fact. Given persistent disagreement, almost any social institution will induce some forms of competition between people with different views. So it is not a choice of competition or not, but between forms of competition. one issue is what defines the "winners" in the competition: is it following the rules of democracy (one person/one vote) or those of the market (one dollar/one vote)? I think that Kato Kaelin was the perp who done the dirty deed ;-) Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Progressive Information Aggregation Institutions?
Peter Dorman wrote: ... I suspect that publicizing the ongoing status of a betting game would tend to interfere with discourse just as constant opinion polling does to our elections and repeated straw votes would do to a discussion at a meeting. Just about anything that happens at a meeting could distract from the conversation at hand. But things that would distract a meeting conversation need not distract a nation's discourse, because there are already so many other distractions available. Consider the possibilities of banning betting/trading on sports, on corn futures, or on IBM stock. Would this create a healthier national debate on who will win which sport contests, better estimates of future corn prices, or better estimates of the profitability of IBM market strategies? Or would fewer people now pay attention to these issues? My guess is that since there are so many other opportunities out there for distraction and speculation, banning betting on these topics would mainly just reduce interest in such subjects. My sense is that the biggest gains are likely to come from more effective vehicles for promoting discourse than more accurate mechanisms for aggregating currently-held opinions. OK, but the question then is: what does promote healthy discourse on some particular topic? Three inputs that come to my mind are: 1) More and wider-spread direct personal interest in the topic, 2) More accurate estimates on related topics, topics which one would refer to in making arguments about this topic, and 3) Ways to publicly identify those whose arguments are insincere. Betting markets can offer all three of these inputs (the last one via seeing who is unwilling to "put their money where their mouth is".) Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Progressive Information Aggregation Institutions?
Peter Dorman wrote: How is this: "If agreement X is signed into law during time period Y, what will be the change in sea level between Jan. 1 2000 and Jan. 1 2030?" And "If agreement X is not signed into law?" And the payoff is in 2030. Close enough for this discussion, I think. One problem: Agreement X must be specified precisely in order to satisfy the terms of the betting game, but negotiations are not complete, and the agreement could fall within a wide range of content specifics along a number of parameters. The Hague negotiations were multi-dimensional, after all. Thus, either agreement X is specified so broadly that the dispersion of guesses is dominated by different perceptions of the likely content of X, or it is specified so narrowly that it fails to yield sufficient information to guide negotiators. Or the betting game is conducted only upon the conclusion of the agreement and serves to assist ratification only. (This is what I mean by a small number of applicable issues.) But by this argument it is impossible to ever give useful policy advice. After all, ifanyone claims to offer an opinion on the likely consequences of some policy X, you could respond that "either the policy X is specified so broadly that the estimation of its consequences is dominated by different perceptions of the likely content of X, or it is specified so narrowly that it fails to yield sufficient information to guide us." Second problem: Ratifying X is not independent of other state variables that rational bettors would take into consideration in formulating their bets. Thus, in the simplest case, the successful conclusion of X is plausible predictor of the likelihood of concluding further agreements between now and 2030. So just what are these bets telling us? In this case you could say that one of the main reasons to ratify X would be to make it easier to ratify further agreements in the future. This is a reasonable point to consider when considering whether to ratify X.
Re: Re: Re: Re: Progressive Information Aggregation Institutions?
How is this: "If agreement X is signed into law during time period Y, what will be the change in sea level between Jan. 1 2000 and Jan. 1 2030?" And "If agreement X is not signed into law?" And the payoff is in 2030. One problem: Agreement X must be specified precisely in order to satisfy the terms of the betting game, but negotiations are not complete, and the agreement could fall within a wide range of content specifics along a number of parameters. The Hague negotiations were multi-dimensional, after all. Thus, either agreement X is specified so broadly that the dispersion of guesses is dominated by different perceptions of the likely content of X, or it is specified so narrowly that it fails to yield sufficient information to guide negotiators. Or the betting game is conducted only upon the conclusion of the agreement and serves to assist ratification only. (This is what I mean by a small number of applicable issues.) Second problem: Ratifying X is not independent of other state variables that rational bettors would take into consideration in formulating their bets. Thus, in the simplest case, the successful conclusion of X is plausible predictor of the likelihood of concluding further agreements between now and 2030. So just what are these bets telling us? Peter Robin Hanson wrote: Peter Dorman wrote: Let me see if I understand. Take the case of rising sea levels as a function of CO2. How exactly would you organize a betting market for this? (a) What precisely would people bet on? Could you provide a sample question? (b) How, and at what time, would you adjudicate the winner? To be more policy relevant, we might consider some specific politicalagreement to tax or limit CO2, and ask whether making that agreement will actually reduce sea levels in the year 2030. We could great assets which pay off cash in propotion to some official measurement of sea levels in 2030. Payoff might happen in say 2032. We could then trade those assets for cash in two different markets. In one markets trades would be called off if the agreement were not actually made. In the other trades would be called off if the agreement were made. The prices in each market would thus give estimates of 2030 sea levels *conditional* on making the agreement or not. The difference between the prices in the two markets would give an estimate of the effect of the agreement on 2030 sea levels. More info at http://hanson.gmu.edu/policymarkets.html It seems to me that the main problem with betting games is that their usefulness is restricted to a very small set of questions I think the range of possible application is much larger than you realize.
Re: Re: Progressive Information Aggregation Institutions?
OK, your proposal and Sagoff's views on discourse are not mutually exclusive. In practice, however, I suspect that publicizing the ongoing status of a betting game would tend to interfere with discourse just as constant opinion polling does to our elections and repeated straw votes would do to a discussion at a meeting. I could imagine, however, that there could be situations in which the states of mind of participants in a discourse ought to be aggregated in some fashion, and then we might examine betting games. My sense is that the biggest gains are likely to come from more effective vehicles for promoting discourse than more accurate mechanisms for aggregating currently-held opinions. Peter Robin Hanson wrote: On 11/6/2000, I wrote: Peter Dorman wrote: if people disagree about who the best analyst is, then a betting market might give people good incentives to be honest with themselves about who to rely on. This is where democratic discourse comes in. Have you read Mark Sagoff's ECONOMY OF THE EARTH? I like his analogy to juries, which applies to this case. ... I haven't read it, but will if that would enable our discussion to continue. It might take me a few weeks though. It did take a few weeks, but I have now read Sagoff's book. Sagoff criticizes environmental willingness to pay surveys as not sufficiently informing subjects, by analogy to a court which asks for juror votes without letting jurors hear the case. Sagoff also praises democratic deliberation more generally, relative to formal analysis. In hindsight what I said in my last message seems directly relevant. I do not propose to replace or prevent discourse. I do not want prevent jurors or anyone from listening to the case. The question is how to choose when, on matters of fact as opposed to value, disagreement persists, even after substantial discourse. Whose estimate should determine actions? A vote among everyone? A vote among a random jury? Administrative agency experts? A panel of distinguished academics? My proposal was to use the estimate of a betting market. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Progressive Information Aggregation Institutions?
I had written: The question is how to choose, on matters of fact as opposed to value, when disagreement persists, even after substantial discourse. Whose estimate should determine actions? A vote among everyone? A vote among a random jury? Administrative agency experts? A panel of distinguished academics? My proposal was to use the estimate of a betting market. Jim Devine responded: a vote among everyone seems needed to decide general principles. Experts and academics can advise the voters. Votes among those most affected seem appropriate for specific cases, under the rules set by general principles. A betting market encourages people to compete instead of working together on these issues, which is an error when external costs and benefits are so prevalent. I don't think we're communicating. The topic is matters of fact, not value. Such as estimating whether OJ did it, how high sea levels will rise if CO2 emissions are or are not curtailed, or the effect of NAFTA on US unemployment. The question is what the general principles should be for such specific cases (what would you vote for?). Given persistent disagreement, almost any social institution will induce some forms of competition between people with different views. So it is not a choice of competition or not, but between forms of competition. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Re: Progressive Information Aggregation Institutions?
Let me see if I understand. Take the case of rising sea levels as a function of CO2. How exactly would you organize a betting market for this? (a) What precisely would people bet on? Could you provide a sample question? (b) How, and at what time, would you adjudicate the winner? It seems to me that the main problem with betting games is that their usefulness is restricted to a very small set of questions -- but it is difficult to determine this without getting down to specific cases. I like the CO2 example, so let's follow it up. Peter Robin Hanson wrote: I had written: The question is how to choose, on matters of fact as opposed to value, when disagreement persists, even after substantial discourse. Whose estimate should determine actions? A vote among everyone? A vote among a random jury? Administrative agency experts? A panel of distinguished academics? My proposal was to use the estimate of a betting market. Jim Devine responded: a vote among everyone seems needed to decide general principles. Experts and academics can advise the voters. Votes among those most affected seem appropriate for specific cases, under the rules set by general principles. A betting market encourages people to compete instead of working together on these issues, which is an error when external costs and benefits are so prevalent. I don't think we're communicating. The topic is matters of fact, not value. Such as estimating whether OJ did it, how high sea levels will rise if CO2 emissions are or are not curtailed, or the effect of NAFTA on US unemployment. The question is what the general principles should be for such specific cases (what would you vote for?). Given persistent disagreement, almost any social institution will induce some forms of competition between people with different views. So it is not a choice of competition or not, but between forms of competition. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Re: Re: Progressive Information Aggregation Institutions?
Peter Dorman wrote: Let me see if I understand. Take the case of rising sea levels as a function of CO2. How exactly would you organize a betting market for this? (a) What precisely would people bet on? Could you provide a sample question? (b) How, and at what time, would you adjudicate the winner? To be more policy relevant, we might consider some specific politicalagreement to tax or limit CO2, and ask whether making that agreement will actually reduce sea levels in the year 2030. We could great assets which pay off cash in propotion to some official measurement of sea levels in 2030. Payoff might happen in say 2032. We could then trade those assets for cash in two different markets. In one markets trades would be called off if the agreement were not actually made. In the other trades would be called off if the agreement were made. The prices in each market would thus give estimates of 2030 sea levels *conditional* on making the agreement or not. The difference between the prices in the two markets would give an estimate of the effect of the agreement on 2030 sea levels. More info at http://hanson.gmu.edu/policymarkets.html It seems to me that the main problem with betting games is that their usefulness is restricted to a very small set of questions I think the range of possible application is much larger than you realize.
Re: Progressive Information Aggregation Institutions?
On 11/6/2000, I wrote: Peter Dorman wrote: if people disagree about who the best analyst is, then a betting market might give people good incentives to be honest with themselves about who to rely on. This is where democratic discourse comes in. Have you read Mark Sagoff's ECONOMY OF THE EARTH? I like his analogy to juries, which applies to this case. ... I haven't read it, but will if that would enable our discussion to continue. It might take me a few weeks though. It did take a few weeks, but I have now read Sagoff's book. Sagoff criticizes environmental willingness to pay surveys as not sufficiently informing subjects, by analogy to a court which asks for juror votes without letting jurors hear the case. Sagoff also praises democratic deliberation more generally, relative to formal analysis. In hindsight what I said in my last message seems directly relevant. I do not propose to replace or prevent discourse. I do not want prevent jurors or anyone from listening to the case. The question is how to choose when, on matters of fact as opposed to value, disagreement persists, even after substantial discourse. Whose estimate should determine actions? A vote among everyone? A vote among a random jury? Administrative agency experts? A panel of distinguished academics? My proposal was to use the estimate of a betting market. Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Re: Progressive Information Aggregation Institutions?
At 01:13 PM 11/30/00 -0500, you wrote: Whose estimate should determine actions? A vote among everyone? A vote among a random jury? Administrative agency experts? A panel of distinguished academics? a vote among everyone seems needed to decide general principles. Experts and academics can advise the voters. Votes among those most affected seem appropriate for specific cases, under the rules set by general principles. A betting market encourages people to compete instead of working together on these issues, which is an error when external costs and benefits are so prevalent. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
Re: Re: Re: Progressive Information Aggregation Institutions?
I had earlier written : ... if progressives accepted that betting markets were as good at estimating as other known institutions, they might serve as a neutral forum for deciding many other important policy questions. Peter Dorman wrote: I've been thinking about this for a while ... Betting markets make sense when (a) there are severe problems of incentive compatibility among analysts, or (b) the problem is essentially one of aggregating vast amounts of private information. ... (a) Sometimes analysts are sufficiently biased ... there is something to be said for an analytical mechanism that gives people an overriding incentive to be accurate. (b) ... classical Hayekian problem. Each of us has a particular bit of insight ... Here the chief limitation is the one-dimensionality of the market aggregation ... But what about situations in which all of the relevant information is already public, and the disagreement centers on how to interpret that information? ... A single skillful interpreter ... is going to be more reliable than a market aggregation ... I would go with, say, Walter Dean Burnham rather than the Iowa election bettors any day, or Martin Carnoy (biases and all) rather than Robin's education reform bettors. OK, but picking one analyst can't really serve as an ideologically neutral forum, right? Typically, people will disagree on who are the best analysts. So if we as a society want a neutral institutional forum in which we decide which analysts we will rely on, then we want something else. How to best interpret data, and who the best analysts are, are subjects that people have different information on, just as they do regarding different data. If we want to give people incentives to be careful and honest in aggregating this other information, we might again consider betting markets. Put another way, if everyone agreed with you about who the best analyst is, then a betting market would just parrot that analysts opinions. But if people disagree about who the best analyst is, then a betting market might give people good incentives to be honest with themselves about who to rely on. The dimensionality issue can be addressed by creating a market for each important dimension, or by a new form of government with one dominant "national welfare" policy dimension (http://hanson.gmu.edu/futarchy.html). Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Progressive Information Aggregation Institutions?
Peter Dorman wrote: A single skillful interpreter ... more reliable than a market aggregation ... if people disagree about who the best analyst is, then a betting market might give people good incentives to be honest with themselves about who to rely on. This is where democratic discourse comes in. Have you read Mark Sagoff's ECONOMY OF THE EARTH? I like his analogy to juries, which applies to this case. (He is a bit weak on the problems of democracy, to put it mildly, but that's another question.) I haven't read it, but will if that would enable our discussion to continue. It might take me a few weeks though. I hope it is clear that I do not propose to *replace* discourse with betting. The question is what happens when disagreement persists, even after substantial discourse. Imagine we knew the right answer for some trial of fact (e.g., did OJ do it?) and we present a bunch of evidence to both a jury and a betting market. We then repeat this process a bunch of times to get statistics on how well each institution does. Are you confident that the jury will get the right answer more often than the betting market? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Re: Progressive Information Aggregation Institutions?
I've been thinking about this for a while (thanks!), and here's what I've come up with: Betting markets make sense when (a) there are severe problems of incentive compatibility among analysts, or (b) the problem is essentially one of aggregating vast amounts of private information. (This doesn't mean they are practicable, of course, just that they make sense.) (a) Sometimes analysts are sufficiently biased that their professional analyses can't be relied on. Thus, the best predictor of an education researcher's study of the effects of vouchers is probably going to be that person's own attitudes toward vouchers. In such cases, there is something to be said for an analytical mechanism that gives people an overriding incentive to be accurate. A betting market -- again in principle -- might do this. (b) The aggregation of private information is the classical Hayekian problem. Each of us has a particular bit of insight relevant to the overall question; how do we incorporate all of these? Answer: let each bid based on his or her insight, and the market aggregation of bids becomes an informational aggregation. Here the chief limitation is the one-dimensionality of the market aggregation, but that's old hat. (But still quite relevant -- especially when analyzing public policies.) But what about situations in which all of the relevant information is already public, and the disagreement centers on how to interpret that information? Here we might take the advice of Galileo, "If science were like hauling grain, a hundred horses would be better than one; but science is like a race, and a fast steed is preferable to a hundred work-horses." A single skillful interpreter, especially one who puts all his or her assumptions and methods on the table, is going to be more reliable than a market aggregation of bettors. In other words, I would go with, say, Walter Dean Burnham rather than the Iowa election bettors any day, or Martin Carnoy (biases and all) rather than Robin's education reform bettors. Peter Robin Hanson wrote: I had written: ... if progressives accepted that betting markets were as good at estimating as other known institutions, they might serve as a neutral forum for deciding many other important policy questions. Peter Dorman responded: ... I would not rule out games and simulations of this kind ... but when we start getting specific it becomes clear that the applications are limited and leave many problems unsolved. So here's my question for you: can you suggest particular social issues for which a more democratic society than ours might want to set up a wagering simulation? Yes; I think the applications are much wider than you realize. A betting market can be asked to estimate any ex post observable consequences of any observable decision. So betting markets can, for example, be asked to estimate crime rates given that we pass a certain gun control bill, or given that we do not. The difference between these estimates would be an estimate of the effect of gun control on crime rates (see: http://hanson.gmu.edu/decisionmarkets.pdf). Similarly, betting markets could estimate the effect of a death penality on crime rates, of higher minimum wages or laws supporting unions on wages and unemployment, or of national health insurance on mortality and morbidity. Betting markets might even estimate the effect of adopting some radical new form of government on broad measures of national welfare, such as GDP, lifespan, literacy, or whatever. If betting markets estimated that progressive policy proposals would substantially raise commonly accepted measures of good policy outcomes, that would be a powerful argument in favor of those proposals, an argument especially hard for market advocates to resist. And progressives who accept betting markets as reasonable estimation institutions, and who think that on average hard-headed speculators will agree that the best arguments and evidence support their views, should expect betting market estimates to also support their views. This is the sense in which I meant that betting markets might serve as a neutral forum for policy debates, a forum that might be acceptable to a wide range of ideologies, and give prompt if tentative resolution of disputes. We might even consider a new form of government based on this concept (http://hanson.gmu.edu/futarchy.html).
Re: Progressive Information Aggregation Institutions?
Peter Dorman wrote: An example of what you are talking about is Domenico Nuti's idea of a "pari-mutual" stock market: people would buy and sell stocks ... but ... no ownership rights ... The whole point would be generating information, ... I can't say I was too impressed ...That does sound interesting, though I too would be worried about the details. Perhaps these betting game are reasonable for probabilities, but not, I would think, for valuations. Then there are the Hayekian (or M. Polanyi-ish) questions about qualitatively different types of information. Yes, I grant that betting markets in essense estimate probabilities, rather than values.I haven't seen types of information that betting markets do better or worse at aggregating, relative to other institutions, but grant that there may be such types. I would not rule out games and simulations ... but when we start getting specific it becomes clear that the applications are limited and leave many problems unsolved. So here's my question for you: can you suggest particular social issues for which a more democratic society than ours might want to set up a wagering simulation?Fair enough. I will do so in my next message.
Re: Progressive Information Aggregation Institutions?
I had written: ... if progressives accepted that betting markets were as good at estimating as other known institutions, they might serve as a neutral forum for deciding many other important policy questions. Peter Dorman responded: ... I would not rule out games and simulations of this kind ... but when we start getting specific it becomes clear that the applications are limited and leave many problems unsolved. So here's my question for you: can you suggest particular social issues for which a more democratic society than ours might want to set up a wagering simulation? Yes; I think the applications are much wider than you realize. A betting market can be asked to estimate any ex post observable consequences of any observable decision. So betting markets can, for example, be asked to estimate crime rates given that we pass a certain gun control bill, or given that we do not. The difference between these estimates would be an estimate of the effect of gun control on crime rates (see: http://hanson.gmu.edu/decisionmarkets.pdf). Similarly, betting markets could estimate the effect of a death penality on crime rates, of higher minimum wages or laws supporting unions on wages and unemployment, or of national health insurance on mortality and morbidity. Betting markets might even estimate the effect of adopting some radical new form of government on broad measures of national welfare, such as GDP, lifespan, literacy, or whatever. If betting markets estimated that progressive policy proposals would substantially raise commonly accepted measures of good policy outcomes, that would be a powerful argument in favor of those proposals, an argument especially hard for market advocates to resist. And progressives who accept betting markets as reasonable estimation institutions, and who think that on average hard-headed speculators will agree that the best arguments and evidence support their views, should expect betting market estimates to also support their views. This is the sense in which I meant that betting markets might serve as a neutral forum for policy debates, a forum that might be acceptable to a wide range of ideologies, and give prompt if tentative resolution of disputes. We might even consider a new form of government based on this concept (http://hanson.gmu.edu/futarchy.html).
Re: Progressive Information Aggregation Institutions?
Robin, I have several questions about your scheme. 1. I mentioned before about the apparent irrationality in both stock markets is in foreign exchange markets. 2. In those markets, you have people with training and with access to enormous amounts of information. Among the public, you have people who are inundated with misinformation daily. Would the markets you propose aggregate information or disinformation? 3. In California, a few people are spending $50 million for an initiative on school vouchers. The payoff for the private education industry is many, many times greater than that amount. In these markets, couldn't a self-interested group spend a small amount of money to rig the outcome? -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Progressive Information Aggregation Institutions?
Michael Perelman wrote: Robin, I have several questions about your scheme. 1. I mentioned before about the apparent irrationality in both stock markets is in foreign exchange markets. 2. In those markets, you have people with training and with access to enormous amounts of information. Among the public, you have people who are inundated with misinformation daily. Would the markets you propose aggregate information or disinformation? Yes of course, the world of people is filled with irrationality and disinformation.Therefore any institution built from people will also suffer from these. But the question we must ask is this *comparative* institutional one: Which social institutions for information aggregation provides on average the most accurate estimates, presumably in part by muting these problems? There are some suggestive theoretical arguments why speculative markets would do well at this, and some encouraging data showing them doing well, though of course these are far from definitive. 3. In California, a few people are spending $50 million for an initiative on school vouchers. The payoff for the private education industry is many, many times greater than that amount. In these markets, couldn't a self-interested group spend a small amount of money to rig the outcome? If speculators saw advocates trying to bias a market price in order to influence a decision,they would have incentives to counteract that bias by trading on the other side. And since speculators have far more than $50M to spend, they would easily win this fight. A more serious problem is where speculators fear that the people spending this $50M actually do know something that others do not. This would seem to allow people to bias results by choosing not to reveal information. But in theory at least there isn't a bias when we average over the possible things they might know. Also, again, the real question is comparative -- what alternative estimation institution is less able to be biased by interested parties?
Re: Re: Re: Progressive Information Aggregation Institutions?
Robin Hanson wrote: Iowa Electronic Markets (http://www.biz.uiowa.edu/iem/) ... Does that market predict better than the polls? Yes, it predicts substantiallly better than polls. Follow URL for refs. As they say in physics, don't believe an observation until it's confirmed in theory. Why should the Iowa political stock market work? Participants are almost certainly less representative of the general population than a pollster's random sample. Participants have no special insight into public opinion, either - and they're almost certainly to the right (probably in a libertarian direction) of the general population. If efficient market theory has a joint hypothesis problem - that it's both a theory of expectations and how well the markets reflect those expectations - doesn't this have it in spades? At least stock market participants are the people whose expectations matter to stock prices. You have to explain why the opinions of the Iowa participants are valid stand-ins for the opinions of the electorate. Is it just another example of Keynes's guessing about what common opinion will be, of "aping unreason proleptically"? Doug
Re: Re: Progressive Information Aggregation Institutions?
Is it not the case that the Iowa market had Gore in the lead until just about a week ago or so? Barkley Rosser -Original Message- From: Michael Perelman [EMAIL PROTECTED] To: [EMAIL PROTECTED] [EMAIL PROTECTED] Date: Friday, November 03, 2000 12:59 AM Subject: [PEN-L:3895] Re: Progressive Information Aggregation Institutions? Robin, we have discussed your question quite a bit in the past. Polls are obviously flawed. The people who play the Iowa game are fairly well informed, so they can use information that goes beyond a simple poll. I don't think that markets do a particularly good job of managing information. The wild swings in the stock market do not seem to have anything to do with the arrival of information. A few people on the list are sympathetic to the Hayekian view of markets. We exhausted that discussion, so much so that I called a halt to the discussion. I know that at one time your colleague, Don Lavoie, was trying to do something like you seem to want to do. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Progressive Information Aggregation Institutions?
Michael Perelman wrote: Robin, we have discussed your question quite a bit in the past. ... A few people on the list are sympathetic to the Hayekian view of markets. We exhausted that discussion, so much so that I called a halt to the discussion. I know that at one time your colleague, Don Lavoie, was trying to do something like you seem to want to do. Sorry I missed the previous discussion, and sorry if your experience with Donmakes you suspect that I'm trying to start a big long argument over some grand Hayekian theory of how all markets are better at all information things than all other institutions. I'm really not. Instead, I wanted to discuss the much more limited question of whether betting markets do well at estimating the things that they bet on. This more limited topic is interesting for two reasons. First, it allows for relatively objective "horse races" that compare social institutions. And second, if progressives accepted that betting markets were as good at estimating as other known institutions, they might serve as a neutral forum for deciding many other important policy questions. Polls are obviously flawed. The people who play the Iowa game are fairly well informed, so they can use information that goes beyond a simple poll. I don't think that markets do a particularly good job of managing information. If you think polls are too easy an institution to beat, what would you suggest as amore challenging comparison? Doug Henwood wrote: As they say in physics, don't believe an observation until it's confirmed in theory. Why should the Iowa political stock market work? Many theories have been offered, though I'm sure each one has faults. But are you saying there's no amount of data that could convince you in the absense of a complete theory of how speculative markets work? Jim Devine wrote: the "Iowa Electronic Markets" are extrapolating trivia. Perhaps so, but we might make similiar markets that estimate more imporant things. Tom Walker wrote: Also I doubt there's enough money involved to cause some one to try to fix the election so they can clean up on the Iowa Market. Even if they did, that would still have the markets estimating well. Barkley Rosser wrote: ... Iowa market had Gore in the lead until just about a week ago or so? I think it was about two weeks ago, but yes.
Re: Re: Re: Progressive Information Aggregation Institutions?
In my Natural Instability book, I made the case that foreign exchange markets are perhaps the purest markets that exist, yet they are perhaps the most unstable. did not mean to say anything ill about Don. I only met him once although I had corresponded with him for a while. My experience with him was altogether positive. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Re: Re: Progressive Information Aggregation Institutions?
An example of what you are talking about is Domenico Nuti's idea of a "pari-mutual" stock market: people would buy and sell stocks in socialist firms, and even make (or lose) money off the transaction, but there would be no ownership rights or (if I recall correctly) dividends. The whole point would be generating information, much like the Iowa election thing. I can't say I was too impressed with the idea, since problems would be sure to arise from parallel and inconsistent structures: social ownership/control/management over here and privately interested gambling over there. It would make the Black Sox look saintly by comparison. More generally, it is important to distinguish between different types of information and different signalling effects of market prices. Doug referred to the problems of markets whose payoff is based on anticipating what others will do a few weeks, or nanoseconds, after you. There is also the question of whether we are interested in the v's or pi's of our expected utility formulas (to wax neoclassical for a moment). Perhaps these betting game are reasonable for probabilities, but not, I would think, for valuations. Then there are the Hayekian (or M. Polanyi-ish) questions about qualitatively different types of information. I guess I'm saying that I would not rule out games and simulations of this kind (which I use in class), but when we start getting specific it becomes clear that the applications are limited and leave many problems unsolved. So here's my question for you: can you suggest particular social issues for which a more democratic society than ours might want to set up a wagering simulation? Peter Robin Hanson wrote: Instead, I wanted to discuss the much more limited question of whether betting markets do well at estimating the things that they bet on. This more limited topic is interesting for two reasons. First, it allows for relatively objective "horse races" that compare social institutions. And second, if progressives accepted that betting markets were as good at estimating as other known institutions, they might serve as a neutral forum for deciding many other important policy questions.
Progressive Information Aggregation Institutions?
Hello all. I'm an open-minded economist who mostly hangs around libertarian-leaning economists, but who is interested in engaging economists who lean far in other directions. :-) I have been lurking on this list for two months now, and now want to politely ask one question. What do progressive economists think of how well speculative markets aggregate information, relative to feasible alternatives? One might reasonably complain that stock and other financial markets reflect an obscene concentration of wealth, work in the service of profits not people, and waste more in useless casino speculation than they help in allocating real capital. Nonetheless, one might also grant that such markets seem to do a good job at aggregating information into prices. Yes, speculators suffer from herding, beauty contests, and bubbles, perhaps especially regarding long-term aggregate price movements. But one might still be impressed by the accuracy and timeliness of, for example, the Iowa Electronic Markets (http://www.biz.uiowa.edu/iem/) at predicting election results. Can progressive economists identify some other specific social institution that they believe does better at aggregating information, and which hence consistently makes more accurate timely estimates of things like who will win an election or a horse race? Or do most progressive economists grant that, whatever their other failings, such betting markets do reasonably well in terms of producing accurate timely estimates, at least if we set aside long-term aggregate price movements? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Progressive Information Aggregation Institutions?
What do progressive economists think of how well speculative markets aggregate information, relative to feasible alternatives? have you read Doug Henwood's book, WALL STREET? It's a good place to start (and it's well written). One might reasonably complain that stock and other financial markets reflect an obscene concentration of wealth, work in the service of profits not people, and waste more in useless casino speculation than they help in allocating real capital. right. Nonetheless, one might also grant that such markets seem to do a good job at aggregating information into prices. Yes, speculators suffer from herding, beauty contests, and bubbles, perhaps especially regarding long-term aggregate price movements. right. But one might still be impressed by the accuracy and timeliness of, for example, the Iowa Electronic Markets (http://www.biz.uiowa.edu/iem/) at predicting election results. Perhaps that says something about the ability of financial markets to corrupt election results? Does that market predict better than the polls? it seems to me that it would reflect polling results to a large extent. Can progressive economists identify some other specific social institution that they believe does better at aggregating information, and which hence consistently makes more accurate timely estimates of things like who will win an election or a horse race? Or do most progressive economists grant that, whatever their other failings, such betting markets do reasonably well in terms of producing accurate timely estimates, at least if we set aside long-term aggregate price movements? The problem, as Kenneth Arrow points out in his SOCIAL CHOICE AND INDIVIDUAL VALUES is that markets reflect only individual self-interest, making it very hard to express individuals' social values. They encourage only the expression of greed, not individual's visions of what should be. A system of political democracy would do much better, especially if it is no longer dominated by moneyed interests (via campaign contributions, lobbying, etc.) Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~jdevine
FW: Progressive Information Aggregation Institutions?
. . . Or do most progressive economists grant that, whatever their other failings, such betting markets do reasonably well in terms of producing accurate timely estimates, at least if we set aside long-term aggregate price movements? Robin Hanson I'd say you are glossing over the most important issue -- that the information markets gather is premised on excessively narrow criteria for what is important. Externality and public aspects of production and consumption are ignored. In general, markets are good at aggregating information that is insufficient for determining social welfare. mbs
Re: Progressive Information Aggregation Institutions?
Hi Robin, What do progressive economists think of how well speculative markets aggregate information, relative to feasible alternatives? I would suggest looking at speculative market reactions to downsizing reports in the 1980s and 1990s. Job cuts were greeted by jumps in stock prices. Subsequent analysis, however has found no significant relationship between reductions in staffing and increases in productivity. see http://www.unites.uqam.ca/ideas/data/Papers/nbrnberwo4741.html There have also been studies that show increased labour costs from long-term disability. In this case you might say that the markets were efficient in aggregating misinformation. Bre-x was another instance where I would suggest that people were buying into a swindle largely because they felt that Bre-x was a nasty piece of business and that they were somehow in on the scam. Same with the heights of NASDAQ fever, people were buying BECAUSE the rise was not credible and they didn't want to miss out! Can progressive economists identify some other specific social institution that they believe does better at aggregating information, and which hence consistently makes more accurate timely estimates of things like who will win an election or a horse race? The library, conversation, critical reflection. Tom Walker Sandwichman and Deconsultant Bowen Island (604) 947-2213
Re: Re: Progressive Information Aggregation Institutions?
I asked: What do progressive economists think of how well speculative markets aggregate information, relative to feasible alternatives? Jim Devine responded: have you read Doug Henwood's book, WALL STREET? ... Yes. Iowa Electronic Markets (http://www.biz.uiowa.edu/iem/) ... Does that market predict better than the polls? Yes, it predicts substantiallly better than polls. Follow URL for refs. Tom Walker responded: ... speculative market reactions to downsizing ...Subsequent analysis, ... found no significant relationship Bre-X ... buying into a swindle ... I'll accept these as specific examples of errors in market estimates. But the question is whether some other source has fewer errors on average. Can progressive economists identify some other specific social institution that they believe ... consistently makes more accurate timely estimates of things like who will win an election or a horse race? The library, conversation, critical reflection. Let's say I want a probability estimate right now of the chance Bush will win. What specific library or conversation should I go to get get a better estimate than I could find at Iowa Electronic Markets? Max Sawicky responded: I'd say you are glossing over the most important issue -- that the information markets gather is premised on excessively narrow criteria for what is important. Point granted, at least with respect to familiar financial markets. But it may be possible to create new speculative markets that gather more socially relevant information.
Re: Re: Re: Progressive Information Aggregation Institutions?
At 09:57 PM 11/02/2000 -0500, you wrote: Let's say I want a probability estimate right now of the chance Bush will win. What specific library or conversation should I go to get get a better estimate than I could find at Iowa Electronic Markets? can't it be said that the chances are 100% that Bush will win, since Gore (and the whole "new Democratic movement" of the Democratic Leadership Council) has morphed into Bush? That may be a little extreme, but it suggests that the "Iowa Electronic Markets" are extrapolating trivia. Jim Devine [EMAIL PROTECTED] http://bellarmine.lmu.edu/~JDevine
Re: Progressive Information Aggregation Institutions?
Robin, we have discussed your question quite a bit in the past. Polls are obviously flawed. The people who play the Iowa game are fairly well informed, so they can use information that goes beyond a simple poll. I don't think that markets do a particularly good job of managing information. The wild swings in the stock market do not seem to have anything to do with the arrival of information. A few people on the list are sympathetic to the Hayekian view of markets. We exhausted that discussion, so much so that I called a halt to the discussion. I know that at one time your colleague, Don Lavoie, was trying to do something like you seem to want to do. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail [EMAIL PROTECTED]
Re: Progressive Information Aggregation Institutions?
Robin Hanson replied .. speculative market reactions to downsizing ...Subsequent analysis, .. found no significant relationship Bre-X ... buying into a swindle ... I'll accept these as specific examples of errors in market estimates. But the question is whether some other source has fewer errors on average. You know the joke about predicting market crashes being like a stopped clock -- it's right twice a day. One might say the converse for markets. They may *on average* perform the aggregation of (admittedly constrained) information relatively efficiently. But when they foul up, they really foul up. I wouldn't necessarily attribute the problem with markets to markets but to the phenomenon that where there's a system, someone will find a way to "work" the system. Markets are not immune to manipulation and may offer an unusual amount of motivation and opportunity for doing so, not to mention ideological justification. Let's say I want a probability estimate right now of the chance Bush will win. What specific library or conversation should I go to get get a better estimate than I could find at Iowa Electronic Markets? I would have to say that the Iowa "Markets" could more resemble a highly structured conversation than an actual market. Unlike stock markets, the buying and selling activity doesn't feed back into the outcome of the actual election (for now at least). Also I doubt there's enough money involved to cause some one to try to fix the election so they can clean up on the Iowa Market. Tom Walker Sandwichman and Deconsultant Bowen Island (604) 947-2213
Re: Textual Quibble Re: Re: Designing Institutions: Is it Poss...
Sorry 'bout that, Carrol. --jks In a message dated 7/15/00 12:42:37 PM Eastern Daylight Time, [EMAIL PROTECTED] writes: Now that Justin and I are speaking to each other in civil terms I can make a remark on the spelling of my name. [EMAIL PROTECTED] wrote: I appreciate Carroll's "Carrol" (single L) please. My grandmother either was a poor speller or had some other reason for not picking the conventional spelling. :-) Carrol
Designing Institutions: Is it Possible?, was Market Socialism, etc.
Rod Hay wrote:
If rationing is required, I think that we can design other institutions that do the
job better than the market can. Hence my advocacy (and I think Jim's) of democratic
control.
When a debate goes on as wildly as this debate has (and as the same debate has in the
past on other lists), one strong possibility is that (a) the parties to the debate (a)
really do not and cannot understand each other and (b) the propositions explicitly
argued are not the questions actully at issue.
I'm not sure myself what the core issues at stake are, but I want to make a
preliminary stab at naming one of them.
*Both* parties to the debate are deeply suspicious of Planning. And *both* parties to
the debate see the other as dangerously committed to planning -- the danger being that
of authoritarian and terrorist rule.
Justin believes that socialist planning of the economy wrong for two reasons:
1. It won't work (it is inefficient) and those in control will therefore
resort to terrorist or at least very heavy-handed methods ("Administrative Methods"
the Chinese called them) to make work what is unworkable.
2. Workers need a clear goal in order to be brought to vote for a socialist
system. Hence it is important to design in advance (plan) the institutions which can
work. The sort of negative organizing which I for example advocate (there are many
variations on this, discussed at the end of this post) is impractical, utopian,
because it can never attract a sufficient number of workers to bring about a social
change. (I'm not sure how to word what follows, so I won't necessarily defend my
specific wording.) And as a result those who favor such
organizing will *in practice* end up supporting some sort of minority ("elitist,"
"bureaucratic") revolution imposing an authoritarian rule by bureaucracy.
-
Now, Rod is trying to make the debate as rational as possible, and very roughly
speaking he and I are on the "same" side. There is a possible serious difference,
however, as brought out in the wording of the post quoted above: Rod believes that
institutions can be *designed*. He also believes in democratic control, however, and
that may qualify the meaning of "design" in this context. In any case, I believe,
roughly, that the designing of institutions *in thought* is fundamentally
totalitarian. I object, that is, to the kind of "Planning" that Doug and
Justin both seem to propose: the planning in advance of the kind of institutions that
will characterize a socialist order.
Now this kind of intellectual conviction will obviously be accompanied by reasonably
strong feeling, and when that feeling comes out quickly, it results in the kind of
insults that Justin and I exchanged.
Extrapolated into the future then, both sides (with some historical justification for
each) believe that the other's position can only result in authoritarian terror. Now I
doubt very much that either Justin or Doug would (at this time) propose shooting
Carrol or Yoshie. And neither of us would propose shooting Justin or Doug. But they
*do* think that our kind of "planning" will result (if successful) in people like them
being shot. And we *do* think that that commitment to "planning" of their type will
under quite possible historical conditions
(conditions that have in fact occurred in the past) result in the shooting of people
like us.
This is clumsy. But I think Justin and Doug should recognize (even if they cannot
understand) that both sides do object to planning -- it is just that each side has a
different perception of the *kind* of planning which is most dangerous.
And it is important to see that each side also regards the other as impossibly
utopian, and to see why this is so. And the kind of utopianism of which each suspects
the other is the kind which, developed in practice, leads to authoritarian terror. But
I'll leave that for another post.
Carrol
Re: Designing Institutions: Is it Possible?, was Market Sociali...
I appreciate Carroll's thoughtful response, as indicated below, which is very
helpful. I wish that we could always talk llike this. Carroll is right that I
think planning (without markets) won't work, would be inefficient. (In a
market context, some, even much, planning is fine).
I am a lot less worried about the concern that, in order to make planning
work, the state in a planned economy would resort to terroristic methids.
That happened, of course, but I don't think it happened because of planning,
but because of the impertaives of industrializxation and modernization, what
Preobrazhensky called "primitive socialist accumulation." Capitalist and
protocapitalsit states did and do the same sorts of things with capitslist
modernization. And of course, state terrorism under socialsim happened to
promote the power of the bureaucratic stratum in that context. In less
developed countries, state trrorism is likely to occur under either model. In
the advanced countries, I think the concern is less.I can understand how I
might have conveyed the impression that planning and terror are linked, and
Hayek certainly thought they were, but I disagree. I think planning can be at
least as democratic as what we have in capitalist democracy. It just cannot
be as efficient.
If I have been upset about what I took., I hope wrongly, and Carroll's
comments encourage me here, to be apologetics for state terror, it was
because I think that defense of the politics of the former and remaining
state socialist regimes is in itself defense of the indefensible, and
furthermore discredits the left. Thus, like Louis, I admire the social
welfare achievements of the Cuban Revolution, which are considerable. I do
not admire the single-party dictatorship, the press censorship, the political
police. And Cuba (Louis is certainly right about this) is the best of the
lot.
Likewise, I do not think that sketching models of a future society is a sort
of "planning," a specification in advance of what we will do. I agree with
those who say that what we will in fact do will emerge from what we do do in
the circumstnces, from the specific problems we have to solve under the
constraints we face. We cannot precommit, OK, in 200 years,w hen we have
state power, we will do this. I can understand why people would think that
would be silly. I think is would be silly.
Rather, the function of modelling is to answer the real question, posed in
practical contexts by the people we work with: why think we can do better? If
we cannot answer plausible and powerful theoretical objections based in and
apparently supported by historical experience, we should not waste our time
striving for radical changes. We should seek to ameliorate the ills of a
system that we must rationally concede we cannot explain that we could
improve on. There is no point in striving for radical changes, and no
sensible person will listen to us, if we have no moere reason to think we can
do better than the answer, well, let's get rid of markets and the working
class will think of some better set of institutions, it's not our job to even
hint at what.
For that matter, if it'[s not our job, we should also be agnostic about the
abolition of markets.
Again, I say, thanks to Carroll for responding to my intemperate outburst
with a civil and intelligent discussion.
--jks
In a message dated 7/15/00 11:10:06 AM Eastern Daylight Time, [EMAIL PROTECTED]
writes:
Justin believes that socialist planning of the economy wrong for two
reasons:
1. It won't work (it is inefficient) and those in control will
therefore resort to terrorist or at least very heavy-handed methods
("Administrative Methods" the Chinese called them) to make work what is
unworkable.
2. Workers need a clear goal in order to be brought to vote for a
socialist system. Hence it is important to design in advance (plan) the
institutions which can work. The sort of negative organizing which I for
example advocate (there are many variations on this, discussed at the end of
this post) is impractical, utopian, because it can never attract a sufficient
number of workers to bring about a social change. (I'm not sure how to word
what follows, so I won't necessarily defend my specific wording.) And as a
result those who favor such
organizing will *in practice* end up supporting some sort of minority
("elitist," "bureaucratic") revolution imposing an authoritarian rule by
bureaucracy.
--
This is clumsy. But I think Justin and Doug should recognize (even if they
cannot understand) that both sides do object to planning -- it is just that
each side has a different perception of the *kind* of planning which is most
dangerous.
Textual Quibble Re: Re: Designing Institutions: Is it Possible?,was Market Sociali...
Now that Justin and I are speaking to each other in civil terms I can make a remark on the spelling of my name. [EMAIL PROTECTED] wrote: I appreciate Carroll's "Carrol" (single L) please. My grandmother either was a poor speller or had some other reason for not picking the conventional spelling. :-) Carrol
Re: Designing Institutions: Is it Possible?, was Market Socialism, etc.
I am not deeply suspicious of planning but of markets. I am not merely suspicious of
markets but on the whole I think them (real markets) evil and to be dispensed with as
far as possible since they ration unjustly, do not take into account externalities, do
not consider needs but effective demand only and lead not to efficiency but anarchy
(pace anarchists) in production. I do not favor top-down command planning with no
citizen and NGO input into the plan but that is another matter.
Cheers, Ken Hanly
Carrol Cox wrote:
Rod Hay wrote:
If rationing is required, I think that we can design other institutions that do
the job better than the market can. Hence my advocacy (and I think Jim's) of
democratic control.
When a debate goes on as wildly as this debate has (and as the same debate has in
the past on other lists), one strong possibility is that (a) the parties to the
debate (a) really do not and cannot understand each other and (b) the propositions
explicitly argued are not the questions actully at issue.
I'm not sure myself what the core issues at stake are, but I want to make a
preliminary stab at naming one of them.
*Both* parties to the debate are deeply suspicious of Planning. And *both* parties
to the debate see the other as dangerously committed to planning -- the danger being
that of authoritarian and terrorist rule.
Justin believes that socialist planning of the economy wrong for two reasons:
1. It won't work (it is inefficient) and those in control will therefore
resort to terrorist or at least very heavy-handed methods ("Administrative Methods"
the Chinese called them) to make work what is unworkable.
2. Workers need a clear goal in order to be brought to vote for a socialist
system. Hence it is important to design in advance (plan) the institutions which can
work. The sort of negative organizing which I for example advocate (there are many
variations on this, discussed at the end of this post) is impractical, utopian,
because it can never attract a sufficient number of workers to bring about a social
change. (I'm not sure how to word what follows, so I won't necessarily defend my
specific wording.) And as a result those who favor such
organizing will *in practice* end up supporting some sort of minority ("elitist,"
"bureaucratic") revolution imposing an authoritarian rule by bureaucracy.
-
Now, Rod is trying to make the debate as rational as possible, and very roughly
speaking he and I are on the "same" side. There is a possible serious difference,
however, as brought out in the wording of the post quoted above: Rod believes that
institutions can be *designed*. He also believes in democratic control, however, and
that may qualify the meaning of "design" in this context. In any case, I believe,
roughly, that the designing of institutions *in thought* is fundamentally
totalitarian. I object, that is, to the kind of "Planning" that Doug and
Justin both seem to propose: the planning in advance of the kind of institutions
that will characterize a socialist order.
Now this kind of intellectual conviction will obviously be accompanied by reasonably
strong feeling, and when that feeling comes out quickly, it results in the kind of
insults that Justin and I exchanged.
Extrapolated into the future then, both sides (with some historical justification
for each) believe that the other's position can only result in authoritarian terror.
Now I doubt very much that either Justin or Doug would (at this time) propose
shooting Carrol or Yoshie. And neither of us would propose shooting Justin or Doug.
But they *do* think that our kind of "planning" will result (if successful) in people
like them being shot. And we *do* think that that commitment to "planning" of their
type will under quite possible historical conditions
(conditions that have in fact occurred in the past) result in the shooting of people
like us.
This is clumsy. But I think Justin and Doug should recognize (even if they cannot
understand) that both sides do object to planning -- it is just that each side has a
different perception of the *kind* of planning which is most dangerous.
And it is important to see that each side also regards the other as impossibly
utopian, and to see why this is so. And the kind of utopianism of which each suspects
the other is the kind which, developed in practice, leads to authoritarian terror.
But I'll leave that for another post.
Carrol
Re: Re: past and future of multilateral institutions (fwd)
G'day Mine - and all you IPEs, This reading and other considerations make me hope that April 16thers will also direct their attention to the panoply of forces to which the WB/IMF are themselves subject: Just wondering - Do we still speak of the Bilderbergers and Trilateral Commission in this connection (as Gill and van der Pijl did) - or is this now in the much-ado-about-nothing basket? Cheers, Rob.
Re: past and future of multilateral institutions (fwd)
-- Forwarded message -- Date: Tue, 04 Apr 2000 01:09:54 -0400 From: [EMAIL PROTECTED] To: WORLD SYSTEMS NETWORK [EMAIL PROTECTED] Cc: [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED] Subject: Re: past and future of multilateral institutions Those interested in the April 16 demo might also benefit from something I accidentally unearthed the other day: Samir Amin, "Fifty Years is Enough, " a fifty-page special in Monthly Review (April 1995), re-analysing the Bretton Woods institutions in the context of postwar capitalist dynamics (and American economic dominance), and assessing possible avenues of (feasible) reform. This reading and other considerations make me hope that April 16thers will also direct their attention to the panoply of forces to which the WB/IMF are themselves subject: -- key congressional committees and other state bodies that influence/determine WB/IMF policies -- conservative congressmen (some of whom see even the WB/IMF as bastions of liberal internationalism)(and who withold funding from the United Nations and its agencies) --key lobbyists and lobbying firms, which construct and sustain the connection between the corporate world and the American state and congress -- identifying those that have allowed particular corporate interests to be favored by the multilaterals - right-wing think tanks that have furthered conservative/pro-corporate international policies - embassies of countries that have been especially complicit in mismanaging their resources, enacting harsh policies, agreeing to ecologically damaging forms of exploitation, etc. - perhaps the headquarters or local office of a corporation or two -- who have somehow been involved in or profited from particular WB/IMF policies. When one thinks of even these local manifestations of the corporate-political networks that oil the gears and pull the strings... the World Bank and IMF seem more than ever the easy targets -- but are they the most essential? For an example of REALLY bad guys at work (in a slightly different domain), consider the following, from the Washgington Post: The Second Amendment, Going Global By Kathi Austin Sunday, March 26, 2000; Page B01 Seventeen months ago, in the aftermath of gory civil wars in Sierra Leone and Liberia and conflicts in neighboring countries that had left more than 250,000 people dead, the Economic Community of Western African States (ECOWAS) decided to try something unprecedented: It announced a three-year moratorium in all 16 member nations on the export, import and manufacture of small arms. Since most of the guns came from outside the region--and because ECOWAS had insufficient money and technical expertise to implement a ban--the West Africans appealed to the international community for help. The United States was among the governments that agreed to contribute, pledging $200,000 toward the moratorium and $1 million more for measures to support conflict resolution. These were modest, even minimal grants. But they didn't get past Sen. Jesse Helms. The chairman of the Senate Foreign Relations Committee, a longtime ally of the National Rifle Association, invoked a provision of the U.S. Foreign Assistance Act to block the funding. In an Aug. 24, 1999, letter to the U.S. Agency for International Development, Helms explained his opposition: "The Small-Arms Moratorium project proposes using U.S. taxpayers' money (among other things) to lobby or promote policies in foreign countries that may very well be a violation of the second amendment to the U.S. Constitution--if the federal government attempted such activities here at home." The proposed aid, Helms wrote, was "nothing less than a brazen international expansion of the President and Vice President's domestic gun control agenda." I've been documenting conflict in Africa firsthand for 12 years, and it's not clear to me what the Second Amendment has to do with blood-soaked Sierra Leone. What does seem clear is that blocking support to ECOWAS was a warning shot in the American gun lobby's plans to go global. The NRA, its allies and affiliates are campaigning against what they describe as a worldwide conspiracy of gun snatchers. The immediate goal appears to be frightening American gun owners, thereby raising money and membership at home. But there is a broader result: thwarting international attempts to contain the spread and misuse of small arms. The most sensational atrocities in the West African wars may have been amputations, carried out with machetes and knives. But the bulk of the killings were committed with rifles, machine guns and semiautomatics--far more efficient instruments of death. There are about 500 million of these cheap, durable and readily available small
Re: [PEN-L:2726] Re: book on global economic institutions
For those who are more production oriented, try Peter Dicken's "Global Shift" (written from a political geography angle, excellent text). More sophisticated edited volumes: Boyer and Drache "States against Markets: the limits of globalization"; Berger and Dore: National Diversity and Global Capitalism. Anthony P. D'Costa Associate Professor Comparative International Development University of Washington 1900 Commerce Street Tacoma, WA 98402, USA Phone: (253) 692-4462 Fax : (253) 692-5612
[PEN-L:2726] Re: book on global economic institutions
How about Eric Helleiner's _States the Reemergence of Global Finance From Bretton Woods to the 1990s_, Ithaca: Cornell University Press, 1996? Mat Peter Dorman wrote: This spring I will be co-teaching a course on international political economy. It would be helpful to be able to assign a book that lays out the history and institutional detail of the global economy: the rise and fall of the dollar standard, the IFI's, the emergence of offshore dollars, financial liberalization, GATT/WTO, etc. What I have in mind is an update of Fred Block's wonderful but now utterly dated "Origins of International Economic Disorder". It would be nice if the book had stirring political analysis, but that is not necessary. The main thing is for students with little or no background in global economics to find out what the facts on the ground are so that they can make sense of the theoretical arguments. Does anyone have suggestions? Peter Dorman
[PEN-L:2723] Re: book on global economic institutions
Peter, As I started to read your message, I was thinking, "what he needs is an update of Fred Block's _Origins of International Economic Disorder_ . . ." Then I got to the punch line in the third sentence. This spring I will be co-teaching a course on international political economy. It would be helpful to be able to assign a book that lays out the history and institutional detail of the global economy: the rise and fall of the dollar standard, the IFI's, the emergence of offshore dollars, financial liberalization, GATT/WTO, etc. What I have in mind is an update of Fred Block's wonderful but now utterly dated "Origins of International Economic Disorder". It would be nice if the book had stirring political analysis, but that is not necessary. The main thing is for students with little or no background in global economics to find out what the facts on the ground are so that they can make sense of the theoretical arguments. Does anyone have suggestions? Peter Dorman Tom Walker http://www.vcn.bc.ca/timework/
[PEN-L:2722] book on global economic institutions
This spring I will be co-teaching a course on international political economy. It would be helpful to be able to assign a book that lays out the history and institutional detail of the global economy: the rise and fall of the dollar standard, the IFI's, the emergence of offshore dollars, financial liberalization, GATT/WTO, etc. What I have in mind is an update of Fred Block's wonderful but now utterly dated "Origins of International Economic Disorder". It would be nice if the book had stirring political analysis, but that is not necessary. The main thing is for students with little or no background in global economics to find out what the facts on the ground are so that they can make sense of the theoretical arguments. Does anyone have suggestions? Peter Dorman
[PEN-L:907] chaoplexity and institutions
When I gave the quote from my "Chaotic Models" piece in the Elgar Companion to Classical Economics I forgot to give the references cited. Here they are. Bhaduri, Amit and Donald J. Harris, (1987) "The Complex Dynamics of the Simple Ricardian System," _Quarterly Journal of Economics_, vol. 102, pp. 893-901. Goodwin, Richard M., (1967) "A Growth Cycle," in C.H. Feinstein, ed., _Socialism, Capitalism and Economic Growth_, Cambridge: Cambridge University Press. Pohjola, Matti T., (1981) "Stable, Cyclic and Chaotic Growth: The Dynamics of a Discrete-Time Version of Goodwin's Growth Cycle Model," _Zeitschrift fur Nationalokonomie_, vol. 41, pp. 27-38. Barkley Rosser -- Rosser Jr, John Barkley [EMAIL PROTECTED]
[PEN-L:845] chaoplexity and institutions
My response to Bill Lear on chaos models of exploitation was a real no-brainer. This is especially true since I was just perusing the recently arrived two-volume _Elgar Companion to Classical Economics_ ed. by Heinz Kurz and Neri Salvadori, Edward Elgar, 1998. Among the entries in there is one on "Chaotic Models," by yours truly, duh. At the (minimal) risk of causing Edward E. to sue Don Roper, Michael Perelman, the University of Colorado, Chico State University, Louis Proyect, boddhisatva, me, or anybody else, I shall quote from my own entry: p. 94: "Pohjola (1981) provides a discrete time version of of the growth cycle model of Richard Goodwin (1967), which in turn was inspired by Marxian antecedents, but with the adaptation of a predator-prey dynamic from ecology as the metaphor for class struggle dynamics." [Pohjola's model shows chaotic dynamics.] pp. 94-95: "Bhaduri and Harris (1987) developed their [model] along more Ricardian lines with a more complicated interpretation for the variables in the logistic function. ... The tuning parameter...is the wage rate. Bhaduri and Harris interpret this parameter to be 'rate of exploitation at "primitive accumulation'"; that is, 'the _maximum rate_ of exploitation that the system is capable of generating' (Bhaduri and Harris, 1987: 897). They note that, following the classical tradition, distributional relations will determine the nature of the dynamics. They also warn that their results imply that the 'approach to the Classical stationary state' is an unsettled matter in the case of a limitation due to a non-producible natural resource such as land." [and can be chaotic] Barkley Rosser - Rosser Jr, John Barkley [EMAIL PROTECTED]
[PEN-L:806] Re: chaoplexity and institutions
On Wed, August 12, 1998 at 16:53:40 (-0400) Rosser Jr, John Barkley writes: This is being sent to three lists, although it is an immediate followup to a thread on pkt (longish). Dave Colander asked if institutions can limit the instabilities associated with chaos and complexity (chaoplexity), a la the famous "corridor of stability" idea of Axel Leijonhufvud. I said maybe, but then said that they may also lead to greater instability. ... You don't distinguish "stability" for powerful investors from "stability" for the population at large, third world victims of "stabilization" policies, etc. How do you capture this notion? This is a big problem I have with Paul Davidson and the otherwise very interesting Randy Wray, who neither seem to have any conception that money massed can affect (future) economic streams much as the sun's mass affects light rays. Bill
[PEN-L:807] Re: chaoplexity and institutions
Bill, Of course it matters "whose stability?" and I fully concur that stability for one group (capitalists) might entail instability for another group (Third World workers). Then again they may both go down in a collapse. My statements were general and irrespective of who is stable and who isn't and did not imply any necessary relation that stability of exploiter equals instability of exploitee, or vice versa. Barkley Rosser On Wed, 12 Aug 1998 16:03:38 -0500 (CDT) "William S. Lear" [EMAIL PROTECTED] wrote: On Wed, August 12, 1998 at 16:53:40 (-0400) Rosser Jr, John Barkley writes: This is being sent to three lists, although it is an immediate followup to a thread on pkt (longish). Dave Colander asked if institutions can limit the instabilities associated with chaos and complexity (chaoplexity), a la the famous "corridor of stability" idea of Axel Leijonhufvud. I said maybe, but then said that they may also lead to greater instability. ... You don't distinguish "stability" for powerful investors from "stability" for the population at large, third world victims of "stabilization" policies, etc. How do you capture this notion? This is a big problem I have with Paul Davidson and the otherwise very interesting Randy Wray, who neither seem to have any conception that money massed can affect (future) economic streams much as the sun's mass affects light rays. Bill -- Rosser Jr, John Barkley [EMAIL PROTECTED]
[PEN-L:810] Re: Re: chaoplexity and institutions
One is more able to get this with the complexity models with lots of agents and lots of disaggregation. Then one can see such interactions more easily. Barkley Rosser On Wed, 12 Aug 1998 16:23:00 -0500 (CDT) "William S. Lear" [EMAIL PROTECTED] wrote: On Wed, August 12, 1998 at 17:19:38 (-0400) Rosser Jr, John Barkley writes: ... My statements were general and irrespective of who is stable and who isn't and did not imply any necessary relation that stability of exploiter equals instability of exploitee, or vice versa. Yes, I realize that, but don't you think that models should be able to express this form? It seems that this form of sloughing off "instability" onto the mass of society is a very important and much more frequent phenomenon than any sort of aggregate instability. I just wondered if your (or anyone's) chaoplex models captured such a notion... Bill -- Rosser Jr, John Barkley [EMAIL PROTECTED]
[PEN-L:811] Re: Re: chaoplexity and institutions
On 12 Aug 98 at 17:19, Rosser Jr, John Barkley wrote: Bill, Of course it matters "whose stability?" and I fully concur that stability for one group (capitalists) might entail instability for another group (Third World workers). Then again they may both go down in a collapse. My statements were general and irrespective of who is stable and who isn't and did not imply any necessary relation that stability of exploiter equals instability of exploitee, or vice versa. Barkley Rosser On Wed, 12 Aug 1998 16:03:38 -0500 (CDT) "William S. Lear" [EMAIL PROTECTED] wrote: On Wed, August 12, 1998 at 16:53:40 (-0400) Rosser Jr, John Barkley writes: This is being sent to three lists, although it is an immediate followup to a thread on pkt (longish). Dave Colander asked if institutions can limit the instabilities associated with chaos and complexity (chaoplexity), a la the famous "corridor of stability" idea of Axel Leijonhufvud. I said maybe, but then said that they may also lead to greater instability. ... You don't distinguish "stability" for powerful investors from "stability" for the population at large, third world victims of "stabilization" policies, etc. How do you capture this notion? This is a big problem I have with Paul Davidson and the otherwise very interesting Randy Wray, who neither seem to have any conception that money massed can affect (future) economic streams much as the sun's mass affects light rays. Bill -- Rosser Jr, John Barkley [EMAIL PROTECTED] Response: As someone who knows Dave Colander very well and who was the final technical reviewer/editor for his Economics 3rd Edition, Dave and I had many exchanges on institutions, what they do and how to teach about institutions and their roles. Dave gave as a short definition of institutions: "a physical or mental structure that significantly influences economic decisions." (3rd Ed. p.8) and we had a discussion of what exactly is revealed in that definition. One of the approaches I use in class is to give examples of commonly known institutions such as "private property", "marriage", "the family" etc and then to deconstruct and compare them in terms of their core elements and functions. Inductively or adductively students come up with something like the following: institutions are dynamic complexes of interrelated laws, rights, responsibilities, codes, values, constraints, power structures, myths, traditions, taboos, symbols that serve to shape/proscribe/structure/make more predictable human interactions, protect interests, indoctrinate dominant values and paradigms, reduce transactions and information and other costs, legitimate the existing order, promote expanded reproduction/power of the existing system and interests/imperatives of the dominant classes etc. As in the case of a decision tree, certain courses of action or certain interests protected/expanded open up new paths and trajectories and close off others. Chaoplexity may be exacerbated or mitigated on the margins as well as down the line strategically depending upon how effectively those institutions do what institutions do and for whom they do what they do individually and as they interface with other institutions. For example institutions designed to foster labor discipline and higher productivity with lower unit wage costs and benefits may and do contradict and come into conflict with other institutions like the "traditional family" (increasing labor force participation of women etc) such that mitigation of corridors of instability of one institution or set of institutions may widen the corridors of others and indeed of the system overall. I guess I can only retreat to a cliche: one must look at the problem dialectically and ask which institutions, at which stage of history, under what contexts and constraints etc. Jim Craven James Craven Dept. of Economics,Clark College 1800 E. McLoughlin Blvd. Vancouver, WA. 98663 [EMAIL PROTECTED]; Tel: (360) 992-2283 Fax: 992-2863 -- "The utmost good faith shall always be observed towards Indians; their land and property shall never be taken from them without their consent." (Northwest Ordinance, 1787, Ratified by Congress 1789) "...but this letter being unofficial and private, I may with safety give you a more extensive view of our policy respecting the Indians, that you may better comprehend the parts dealt to to you in detail through the official channel, and observing the system of which they make a part, conduct yourself in unison with it in cases where you are obliged to act without instruction...When they withdraw themselves to the culture of a small
[PEN-L:808] Re: Re: chaoplexity and institutions
On Wed, August 12, 1998 at 17:19:38 (-0400) Rosser Jr, John Barkley writes: ... My statements were general and irrespective of who is stable and who isn't and did not imply any necessary relation that stability of exploiter equals instability of exploitee, or vice versa. Yes, I realize that, but don't you think that models should be able to express this form? It seems that this form of sloughing off "instability" onto the mass of society is a very important and much more frequent phenomenon than any sort of aggregate instability. I just wondered if your (or anyone's) chaoplex models captured such a notion... Bill
[PEN-L:805] chaoplexity and institutions
This is being sent to three lists, although it is an immediate followup to a thread on pkt (longish). Dave Colander asked if institutions can limit the instabilities associated with chaos and complexity (chaoplexity), a la the famous "corridor of stability" idea of Axel Leijonhufvud. I said maybe, but then said that they may also lead to greater instability. I wish to follow up: 1) The corridor of stability has inherent in it the possibility that by widening the corridor a bit, thus allowing more local volatility, one may gain more boundedness or global stability of the system. This has a counterpart in ecological theory in the alleged tradeoff between "stability" and "resilience" enunciated by C.S. Holling. A simple example is the oak tree (stable but not resilient in a hurricane) versus the palm tree (unstable but resilient in a hurricane) or elephant populations (stable but unresilient) versus sheep blowfly populations (potentially chaotic but resilient). There are many chaotic systems that are actually very resilient, if locally unstable, including our brains (when we aren't bonkers). 2) An example of an institution trying to increase stability but reducing resilience might be the the government bank insurers, or in Japan and "non-opaque" banking systems the central authorities more generally. In the US this was posed as the "moral hazard" problem of FSLIC in that when banks or lenders or borrowers or all of them felt safe because of the government agency covering for them they engaged in reckless behavior that eventually brought the system to a much greater degree of crisis, especially as we are now seeing in East Asia where lots of lenders and borrowers counted on their governments to maintain pegs to the US dollar. Similar such complacency is what we see at the late stages of speculative asset bubbles a la the Ponzi analysis of Minsky. 2) Nevertheless the fear of actual financial market chaos is currently playing a role in some major institution changing going on right now, in particular European monetary unification. One of the most prominent advocates for the EMU all along has been Paul de Grauwe of the University of Leuven in Belgium. I gave a talk there in 1990 on chaos theory right after he and Kris Vansanten at CEPR in London had published a paper showing how chaotic dynamics could easily arise in forex markets. This was followed up by a book by de Grauwe, Embrechts, and Wachter in 1993 on Chaotic Dynamics in Foreign Exchange Markets that developed the argument much further and has been much cited. I personally am convinced that de Grauwe sees the EMU as the way to KILL THE CHAOS in the European forex markets. 4) Finally I note that in the kinds of models of financial markets where there is a struggle between "fundamentalists" and "chartists" or something like that (which is what is going on the de Grauwe et al models) much more complex dynamics are possible than mere chaos, e.g. fractal basin boundaries (ek!) and some other pretty hairy stuff. A paper giving the full array of this stuff is William A. Brock and Cars H. Hommes, "A Rational Route to Randomness," _Econometrica_, 1997, vol. 65, pp. 1059-1095. Barkley Rosser Professor of Economics James Madison University Harrisonburg, VA 22807 USA -- Rosser Jr, John Barkley [EMAIL PROTECTED]
list of basic econ/social institutions
Larry Shute asks for a list of the basic institutions. I would define an "institution" as any organization created by people. 1) capitalism (the "capitalist mode of production"), a macro-societal institution that includes: a) markets. Not only are there major institutions within these markets (corporations, oligopolies, etc.) but markets themselves have human-created rules and mechanisms. Markets _are_ institutions. One problem with NC econ. is that they treat markets as somehow being natural rather than creations of human beings. b) the state political organizations. The separation of the state from the rest of society into being a specialized sector is a key factor differentiating capitalism from other modes of production. Similar to the state in many ways, but acting in a decentralized way are: c) not-for-profit organizations, including industry self-regulation organizations. (For the life of me, I don't get why these play little or no role in econ. textbooks. My life is surrounded by them.) d) imperialism (the globalizing drive of capitalism. maybe not an institution itself). Bureaucracies are very important institutions in corporations, the state, political organizations, and not-for-profits. They also play a role in: 2) labor unions informal labor organizations. 3) patriarchy: this a long-lived system of male privilege that precedes capitalism and has so far persisted in post-capitalist societies (bureaucratic socialism). 4) ethnic or racial domination. Cutting institutions a different way (following and adding to Robert Heilbroner), one can think of 4 major ways that people organize themselves: 1) tradition, custom, convention. (The role of custom is being accepted more and more by economists these days. A colleague of mine just told me of one at the University of Chicago's economics department who emphasizes the role of customs.) 2) command, bureaucracy, top-down rule. 3) markets, competition. 4) democracy, bottom-up rule. It reveals a lot about Heilbroner that he missed the last one (and that many economists have followed him on this). In personal communication, however, he did indicate that he was willing to accept #4 as a friendly amendment. in pen-l solidarity, Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/1997F/ECON/jdevine.html Econ. Dept., Loyola Marymount Univ. 7900 Loyola Blvd., Los Angeles, CA 90045-8410 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950 "The only trouble with capitalism is capitalists. They're too damned greedy." -- Herbert Hoover
Re: Institutions
Paul, Many thanks for your comments. However, I probably didn't make myself that clear. What information about the actual workings of the Canadian/US economy would you like your students to know before they leave school? For example, they need to know what GATT is, and what's happening with it. They need to know about the workings of the Social Security Act. NAFTA and other "free-trade" associations. The EU. and so on. As an Institutionalist/Marxist, I'm very familiar with Commons and teach him in some of my courses. What I'm really looking for are suggestions which could form the backbone of a economics major senior graduation exam, as well as something that could more usefully serve in the introductory course. I agree with you about the "neoclassical fraud" -- what would you like to see put in its place for an introductory course in economics? I have the feeling that economics majors leave the university without any real knowledge of the actual conditions of industrial life. Thanks again for your input. Larry Shute Thanks for your message at 10:52 PM 10/29/97 -0600, [EMAIL PROTECTED] Your message was: Larry Shute asked for a list of the most important institutions in the market to try to educate his colleagues about the important constraints on the neoclassical fraud (er. sorry "model") of the economy. Unfortunately, I don't think this is a viable approach to the problem. Commons defined an institution as "collective action in control of individual action." That means that "an institution" is anything that constrains market behaviour -- from collective agreements and labour union behaviour to oligopoly pricing behaviour, to church teaching on the moral depravity of working on Sundays. That is, there are no 10 (20, 30, 100) most important institutional constraints/ Institutionalism is a paradigm -- that is institutions form a web of behaviour that (like the neoclassical paradigm) produce a resulting behaviour that one can expect and pattern a policy on. But it is not 10 (20, 30, 40 ) institutions that one can model in the neoclassical sense. One should look at Veblen's classics on this: The Theory of Business Enterprise, Absentee Ownership, The Engineers and the Price System. These are particularly enjoyable reading in the current context of the 'meltdown' of the stock market. I am sure that Thorstein is chuckling in his grave. Paul Paul Phillips, Economics, University of Manitoba.
Re: list of basic econ/social institutions
Jim, Thanks very much for your excellent suggestions. I would also appreciate more specifics from anyone who would like to suggest. Larry Shute Thanks for your message at 11:33 AM 10/30/97 -0800, James Devine. Your message was: Larry Shute asks for a list of the basic institutions. I would define an "institution" as any organization created by people. 1) capitalism (the "capitalist mode of production"), a macro-societal institution that includes: a) markets. Not only are there major institutions within these markets (corporations, oligopolies, etc.) but markets themselves have human-created rules and mechanisms. Markets _are_ institutions. One problem with NC econ. is that they treat markets as somehow being natural rather than creations of human beings. b) the state political organizations. The separation of the state from the rest of society into being a specialized sector is a key factor differentiating capitalism from other modes of production. Similar to the state in many ways, but acting in a decentralized way are: c) not-for-profit organizations, including industry self-regulation organizations. (For the life of me, I don't get why these play little or no role in econ. textbooks. My life is surrounded by them.) d) imperialism (the globalizing drive of capitalism. maybe not an institution itself). Bureaucracies are very important institutions in corporations, the state, political organizations, and not-for-profits. They also play a role in: 2) labor unions informal labor organizations. 3) patriarchy: this a long-lived system of male privilege that precedes capitalism and has so far persisted in post-capitalist societies (bureaucratic socialism). 4) ethnic or racial domination. Cutting institutions a different way (following and adding to Robert Heilbroner), one can think of 4 major ways that people organize themselves: 1) tradition, custom, convention. (The role of custom is being accepted more and more by economists these days. A colleague of mine just told me of one at the University of Chicago's economics department who emphasizes the role of customs.) 2) command, bureaucracy, top-down rule. 3) markets, competition. 4) democracy, bottom-up rule. It reveals a lot about Heilbroner that he missed the last one (and that many economists have followed him on this). In personal communication, however, he did indicate that he was willing to accept #4 as a friendly amendment. in pen-l solidarity, Jim Devine [EMAIL PROTECTED] http://clawww.lmu.edu/1997F/ECON/jdevine.html Econ. Dept., Loyola Marymount Univ. 7900 Loyola Blvd., Los Angeles, CA 90045-8410 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950 "The only trouble with capitalism is capitalists. They're too damned greedy." -- Herbert Hoover
Re: List of Basic Econ/Social Institutions in the Economy
Maybe my reply to Paul Phillips might help to clarify. Thanks for your message at 06:30 PM 10/29/97 -0600, valis. Your message was: Quoth Laurence Shute, in part: I would appreciate your help in compiling a list of the 50 -100 basic economic and social institutions in the US, possibly Canada as well. What are the basic institutions that you feel economics students should have a working knowledge of? Any and all suggestions are welcomed. 50 to 100 such? What in the world do you mean? Do you recall the title of Calvin's great book; what did _he_ mean? Well, where the criteria are so vague, assumption can take flight.
Institutions
Larry Shute asked for a list of the most important institutions in the market to try to educate his colleagues about the important constraints on the neoclassical fraud (er. sorry "model") of the economy. Unfortunately, I don't think this is a viable approach to the problem. Commons defined an institution as "collective action in control of individual action." That means that "an institution" is anything that constrains market behaviour -- from collective agreements and labour union behaviour to oligopoly pricing behaviour, to church teaching on the moral depravity of working on Sundays. That is, there are no 10 (20, 30, 100) most important institutional constraints/ Institutionalism is a paradigm -- that is institutions form a web of behaviour that (like the neoclassical paradigm) produce a resulting behaviour that one can expect and pattern a policy on. But it is not 10 (20, 30, 40 ) institutions that one can model in the neoclassical sense. One should look at Veblen's classics on this: The Theory of Business Enterprise, Absentee Ownership, The Engineers and the Price System. These are particularly enjoyable reading in the current context of the 'meltdown' of the stock market. I am sure that Thorstein is chuckling in his grave. Paul Paul Phillips, Economics, University of Manitoba.
List of Basic Econ/Social Institutions in the Economy
Friends, I would appreciate your help in compiling a list of the 50 -100 basic economic and social institutions in the US, possibly Canada as well. What are the basic institutions that you feel economics students should have a working knowledge of? Any and all suggestions are welcomed. I'm beginning to work on something for my department -- trying to wean some of them away from the same old sifting of the sawdust, supply/demand, etc. And perhaps the list should be only, say, 25 institutions. What do you think? Please respond to my personal e-mail address unless you feel that the issues are general. Many thanks. Larry Shute -- Laurence Shute Voice: 909-869-38500 Department of Economics FAX: 909-869-6987 California State Polytechnic University, Pomona 3801 West Temple Avenue Pomona, CA 91768-4070 USAe-mail: [EMAIL PROTECTED] ---
Re: List of Basic Econ/Social Institutions in the Economy
Quoth Laurence Shute, in part: I would appreciate your help in compiling a list of the 50 -100 basic economic and social institutions in the US, possibly Canada as well. What are the basic institutions that you feel economics students should have a working knowledge of? Any and all suggestions are welcomed. 50 to 100 such? What in the world do you mean? Do you recall the title of Calvin's great book; what did _he_ mean? Well, where the criteria are so vague, assumption can take flight. The most basic economic institutions in the US are the candy stand and the ice cream truck. At these places the good or bad behavior of children is rewarded or appeased with the quasi-junkie rush of unjacketed sucrose, and their lives as active agents of retail consumption begin at the moment they are enabled to hand over the requisite coins themselves. Although this syndrome may gather refinements in adolescence or adulthood, and the mature consumers may no longer be able to live so satisfactorily through their taste buds, the rush is still sought and the seeking itself, however much concealed, remains a cornerstone of sales psychology. Ecce: my $0.02 and your basic institutions. valis "Being right too soon is socially unacceptable." -- Robert Heinlein
[PEN-L:7199] Institutions and the Dissemination of Economic Ideas
Just about everyone I know has horror stories from graduate school about perceived scholar despots, inner cliques, "old boy networks etc". But that level gets us no where beyond anecdotes. A few years ago Dave Colander and Bob Coats edited a book "The Dissemination of Economic Ideas" based on a conference on the same subject. Dave's idea was to move toward the development of a separate specialized area within The History of Economic Thought dealing with specialized study of the institutions, constraints, processes, mechanisms, interests etc through which economic ideas and theories are introduced, chocked off, modified, replaced, superceded and spread within the profession. It involves sort of the economics profession looking at itself and applying some of its own "axioms", theories, constructs (e.g. homo economicus) to itself. What comes through loud and clear is that institutions and institutionalized paradigms whether left, middle or right do what they do. In other words institutions, or dynamic complexes of interrelated values, power structures, codes, constraints, traditions, myths, symbols, rights, privileges, regulations etc serve to structure human interactions, reduce risk and uncertainty, define and reinforce the "sacred" paradigms and ideas while deterring and sanctioning perceived subversive paradigms and ideas, legitmate and reinforce dominant power structures and relations while neutralizing threats to those structures and relations, propagandize, create clones of those in power etc. That is what institutions do--among other things--whether on the right or left. There are "left radicals" and then there are left radicals. In other words there are those for whom being a "left radical" is a total way of life and way of seeing the world and there are "left radicals" for whom being a "left radical" is a kind of specialized market niche allowing CV building through "alternative journals" (and making those alternative journals more and more like the "mainstream" journals in which these folks cannot get published for various reasons), careers with caricatures of the left (e.g. well paid bureaucrats in private and governmental agencies "serving" the poor), comfortable tenured positions that allow course developments based on the narrow and often narcissistic research interests of the course developers (as opposed to on the basis of mass interests or strategic issues in need of detailed examination) and various forms of scholar despotism and insider clique building much like those forms for which the right- wingers in academia are famous--e.g. The Chicago School as a clone factory. What can we say. Ultimately it is not so much what one says what one is as what one does and what one is prepared to risk when the chips are really down. On the right or the left, that tells who is who and what is what. Jim Craven *--* * James Craven * "The envelope is only defined--and * * Dept of Economics* expanded--by the test pilot who dares* * Clark College* to push it." * * 1800 E. McLoughlin Blvd. * (H.H. Craven Jr.(a gifted pilot) * * Vancouver, Wa. 98663 * * * (360) 992-2283 * "For those who have fought for it, * * [EMAIL PROTECTED] * freedom has a taste the protected* * * will never know." (Otto Von Bismark) * * * * * MY EMPLOYER HAS NO ASSOCIATION WITH MY PRIVATE/PROTECTED OPINION *
[PEN-L:6364] Re: query about intl fin system institutions
On Tue, 24 Sep 1996, Steele Jen, (PA) wrote: I am trying to put together a couple of lists relating to economic policy and could use pen-l's help. Among others, Andrea Durbin of Friends of the Earth, D.C. has been doing a great deal over the past year or so. [EMAIL PROTECTED] Maury Foisy Bellingham,WA
[PEN-L:6339] query about intl fin system institutions
I am trying to put together a couple of lists relating to economic policy and could use pen-l's help. The first is a list of U.S. and international organizations working to promote citizen participation in international financial institutions (World Bank, regional development banks, etc.) -- in other words, increasing the transparency and accountability of the institutions, making decision-making more democratic, making bank policies more reflective of local needs. Some obvious examples are Development Group for Alternative Policies, Oxfam, and Bread for the World. Does anyone know of any others? The second is a list of natl and intl organizations that specialize in holistic (systemic) critiques of the international financial SYSTEM. I know this is vague. But what I'm trying to get at are things like alternative investment strategies for union pension funds -- how to earn retires a decent return on their money via investments in sustainable or community development. Ways to change the existing order to provide economic incentives for socially/politically constructive investment. How to approach global capital flows when your concern in human welfare. Who/what research centers are actively thinking about/working on these issues? Any ideas you can share would probably be good leads for me. Thanks in advance for any help you can offer.
[PEN-L:5966] WP about institutions
To the Honorable Body of Coleagues: I have finally posted a working paper in the WUSTL archive. With the title of "Intuition and Institutions, the Bounded Society" I have tried to establlish the link between bounded rationality and the creation of social institutions that determine economic performance. I would be pleased if someone could take a look over it and, maybe, suggest where to publish it. My ignorance have made it difficult to find where is it fit, so I appreciate any help. Maybe private posts would be better, since there is always the possibility of finding no place for it. The paper is in econwpa.wustl.edu, in the economic history archive, by the number 9507001. There seems to be some problems in reading it, I have been able to recover the file 9507001.pdf and read it with Acrobat Read, which is available for free on WWW. Hope to hear from some of you... Macario
[PEN-L:4799] commercial banks as public institutions?
Does anybody know of any literature which confronts the quasi-public character of commercial banks insofar as some of their liabilities function as means of exchange, their subsequent links to the authorities through 'lender of last resort' structures, etc. The point is, how can one tie the peculiar privileges of the banking system to some notion of reciprocal public obligation? Australia is experiencing yet another investigation into social responsibilities of the banking network (or lack of them). The banks, predictably, are claiming that their only responsibility lies with maximising the returns to their shareholders (though the shareholders will certainly be suprised to hear this!).. Evan Jones Economics, Sydney University
