Sunday, January 10, 2010

On Unintended Consequences

So far I've mostly used this space to write about technology, and in pretty abstract and wishy-washy terms. That's not all I want to talk about, but I felt like I needed to get some core stuff ironed out for myself and expressed in concrete language. I may change my mind on a lot of it a couple months from now, but having it recorded in some solid form helps me to direct my thoughts.

This week, though, I've been thinking more about economics. Without question I blame the media for this; Congress is back in action, and the usual public circus continues, with Libertarians and the Right continuing to scream the glories of the free market at the top of their lungs to anyone who will point a camera in their direction. In a better world their energy could be directed toward something more useful -- possibly shoveling literal rather than metaphorical bullshit -- but unfortunately they do get attention, and enough of it that they've already succeeded in derailing some of the most meaningful portions of the health care bill that existed a few months ago.

I have to admit I'm more socialist than not. I can accept the idea that the free market as a concept is useful for explaining the interactions of parties in an unrestricted system. I can even go along with the idea that strict market control from an external policy organization such as the government would be a bad idea when implemented on a very fine-grained level. Trying to plan the production of goods down to a single bar of soap or loaf of bread is likely not going to turn out all that well (although probably better with modern data analysis methods than it did in the 50s without them).

So why am I a socialist rather than a capitalist? Because agreeing that a scientific theory does a good job of explaining a certain system has absolutely nothing whatsoever to do with liking the end result of that system. What comfort is there, when everything around you is going to hell, in being able to explain exactly how you got to that point? Some, maybe, but not enough that I'm willing to just sit back and let it happen.

The most insidious aspect of a concept like the "free market" or the "invisible hand" is that it can be all too easily treated as an anthropomorphic construct. If there exists an unseen force reconciling cost disparity, guiding transactions, and generally acting as a motive force in the world, it's incredibly tempting to carry a background assumption that this force must be guiding us toward something. But this assumption is false; not only false, but dangerous.

After all, if the free market is everywhere, in every transaction, and constantly guiding us toward a supply-and-demand-dictated equilibrium, what hope do our clumsy rules and regulations have of getting anything right? We have such a very small amount of information available to us by comparison, and our fumbling attempts at control backfire more often than not. Surely it must be best to just sit back and let the market guide us to prosperity.

On the surface it even makes sense, until you remember a couple of things. First, emergent systems have no intelligence; the free market has no concept of "better" or "worse", and while it's true that individuals will try to maximize their benefit when spending resources, it's not guaranteed that this will in any way result in the best system for everyone fifty years down the road.

Second, emergent systems are great at finding local maximums, and not much else. If there's a way to improve efficiency compared to where we are now and a path from here to there that's mostly increasing in efficiency, the free market will probably find it. If, however, there's a large area of this conceptual space that's basically "flat" in terms of efficiency, the free market will wander around within this space essentially at random. Even worse, if we're at a high point, the peak of a conceptual mountaintop of efficiency and productivity, and there's a much higher peak in view but you have to cross the metaphorical lowlands to get to it, the free market will never make it there. It takes a conscious decision from someone who can see that the huge long-term effort will eventually pay off, because the market is short sighted and opportunistic.

Third -- and this is the thing that irritates me the most -- there seems to be an implicit assumption from the strongest proponents of unfettered capitalism, because the free market always "improves", that what it comes up with will always sustain our standard of living. In reality, there is absolutely no guarantee that in the process of reaching a local peak, we won't have destroyed the path to anything better. When and if we hit peak oil, will we have enough energy and time left to find an alternative before the reserves run out? If not, will the die-hard capitalists be content with their "free market" solution of returning to the horse and carriage? Something tells me they'll be complaining the loudest.

It's happened before, too many times to count. Yes, sometimes it happens because of war, or political collapse. But sometimes it happens due to sheer economic exhaustion. Do the strict capitalists suppose that the free market has "learned" since any of the hundreds of civilizations that have collapsed due to deforestation or exhaustion of the food supply?

In the end I'm still not sure how to explain it. Do they think that there's some sort of disembodied intelligence planning things out? Or do they just think that there's enough potential for personal gain in an unregulated system that they disregard the larger consequences? I think maybe it's some of both, but either way it's dangerous. We're in the middle of a shouting match with a bunch of people who are basically claiming that conscious decision making and planning have no place in our economy. I just wish they understood the real consequences of what they're asking for.

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