So countries with a lot of trust and good institutions can create very complex computers that are able to process large volumes of information and create complex products that are rare and have a big premium on the market. So by thinking of economies in terms of information and computation, you can also connect institutions with the mix of products that countries make and with wealth. A social network is nothing other than a distributed computer.
Pointer from Mark Thoma. Read the whole interview. Perhaps he is one of those fellows who sounds deep and profound but is not really saying anything.
But I think that there is some significance in the availability of the computer and the Internet as a metaphor. In 1960, machines were the most salient sources of metaphors, and so economists thought in mechanistic terms. As we start to expand our use of computers and networks as metaphors, I think this affects how we view the economy. In some sense, the emphasis on institutions and other components of what Nick Schulz and I call the “software” of the economy are insights that are more likely to occur to economists living in the computer age.
Certainly agree with the notion that the computer has long overtaken the machine as an overriding metaphor. I think of it mostly around talk about the body and brain – now frequently thought of in terms of information and computing. But it’s probably true for economics as well. Thing about computers is they are deterministic – and we have quite a distaste for randomness…
Agreed. Of interest on that point might be Ed Feser’s recent book review in Claremont (http://www.claremont.org/article/looking-for-meaning-in-all-the-wrong-places/#.VXswQ0bzuYF).
One relevant passage:
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Yet they remain essentially committed to Descartes’s conception of the material world; indeed, modern science would not have been possible without it. What they forget is that the res cogitans they deplore was necessitated by the res extensa they maintain. Hold onto the latter and you are implicitly committed to the former, whether you like it or not. This is the source of the perpetual failure of materialists to come up with explanations of consciousness, meaning, and morality that are convincing.
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“Software” has become a useful rhetorical scheme to bridge this res cogitans/res extensa gap. Philosophically that is no better than handwaving, because as you mention, software is deterministic, every effect has a physical cause and so ultimately governed by physical laws. I don’t hold with Descartes, but within that terminology, it belongs wholly to the res extensa. It answers no questions about consciousness or the philosophy of mind. But most people don’t really understand software, it seems like magic, and so if you glide over it quickly, make sure not to look to closely, and it feels like an answer.
Could we use the computer analogy to think of the ’60s economy? The ’30s? Can we use the the machine analogy to think of the 1660’s instead of the 1960’s?
If not, either it “works” because the 1960’s economy really was mechanical, while the 2000’s economy is combinatorial, or they all just appear to fit because of the different colored lenses we choose when we look at each age. (And what is an age? When does it start? When does it end?)
I am not sure what the answer to any of this is. If I had to guess, I would say the metaphors tell us most about the prevailing bias of each age.
Nice way to think about it… probably both we and the world we create have changed over time – new metaphors work until they don’t.
Freud famously envisioned the mind as like a steam engine.
I did not know that!
I don’t want to mislead. Freud never said, “I envision the mind as a steam engine.” However, like a steam engine was powered by steam coursing through the engine, the mind was powered by “drives.” These drives had to be shunted to the right places. They didn’t just disappear. If they were shunted to the wrong places, e.g., they were wrongly “repressed,” they would mess up the machinery.
Tom Wolfe had an essay, “The Boiler Room and the Computer,” about it (suggesting that computers would be the new mind metaphor). The essay is reprinted in Mauve Gloves and Madmen, Clutter and Vine (1976).
I sense a great … emptiness … in the Force.
Okay, so we’ve got computers. We grok that. And I go to Best Buy and buy something, a game, a monitor, whatever. I hand over a credit card, and money is vacuumed from my bank account, and I go away happy with my purchase.
So it’s Best Buy, and not Simon Sells, because there isn’t any Simon Sells chain. And it’s a monitor and I debate myself over the merits of half a dozen competitors before I pick the one I get. So this is a game — an app — a piece of software.
And I use a debit card because my bank gave me a debit card, and I have dollars in the bank, and we use debit cards or charge cards to move dollars about and …. I think this is the operating system. Windows 2015.
And Best Buy, the store I’ve gone into, is a piece of hardware. It’s an ST506 Seagate hard drive existing amongst a vast pool of Seagate and Toshiba and Western Digital hard drives which mostly serve the same purpose.
So this is a better, more complete analogy. And what can we do with it? Not damned much. If we want to talk about the economy and say something significant, we probably ought to talk about the economy and actual events therein, rather than play act with trivial metaphors.