democracy, freedom, law

The Recession, the Economics Profession, and the Prediction of the Future

economic forecasting

economic forecasting

(source)

The current economic recession has cast a shadow on the economics profession. Economists are blamed for not having foreseen the recession. There’s for example this famous article by Paul Krugman.

Whereas many economists undoubtedly have encouraged wrong policies and harmful trade practices, I think it’s unfair to criticize them for failing to predict the future. Contrary to the natural sciences, human sciences (or social sciences) such as economics are constitutionally unable to predict the future. The reason is their subject matter: human beings. Contrary to celestial bodies, atoms or DNA, human beings have free will, which means that we can decide to change our goals and plans. And this kind of decision cannot be foreseen because the decision is our own free choice, a choice therefore that isn’t determined by other factors. Moreover, because we live in society with others, there’s necessarily interaction between people’s goals. Other people have different goals which interfere with our own goals. And because of their own goals, they often do not wish to cooperate with us or even actively oppose us.

There is therefore an uncertainty and unpredictability inherent in our goals. This seems to be an unavoidable fact of social life. An action causes reactions, and that is why the consequences of the action are often different from the ones we intend, expect, predict or desire. Consequences are often unknown beforehand, or at least uncertain. You never know if the result of your action matches your intentions, if you will reach your goal and if things turn out as planned, as foreseen, as initially desired.

That is also why you cannot and should not be held legally or criminally responsible for all the possible consequences or results of your actions. Only for those consequence which could reasonably have been foreseen. Part of the legal definition of a mentally ill person and one of the reasons why such a person’s criminal actions should be punished in a different way (if at all) is this person’s inability to judge the consequences of his or her actions.

Reality often does not live up to expectations. Events are not always anticipated events. Many events escape the power of those who have initiated them or wish to guide them.

Michel de Montaigne

Michel de Montaigne

“Siramnes the Persian replied to those who were amazed that his enterprises turned out so badly, seeing that his projects were so wise, by saying that he alone was master of his projects while Fortune was mistress of the outcome of his enterprises . . . What he undertakes is vain if a man should presume to embrace both causes and consequences and to lead the progress of his action by the hand”. Michel de Montaigne[1]

We all have the experience that the future is not completely determined by the will of an individual or a group. The unexpected and unwanted is part of social history because history, and even many different parts of history – many “stories” – are the result of both action and reaction, of a game of action and reaction over which no one has complete control. This is the inevitable result of the plurality of social life. Demanding prediction and predictability – as is now done of economists – means neglecting plurality. Only in the absence of plurality can predictability be conceived, because only when there is one goal will there be no action and reaction.

Hannah Arendt

Hannah Arendt

Hannah Arendt has lambasted the equation between history and production. History is not made by man in the sense that an artifact, a cultural object or a technological application of scientific knowledge is made by man. It is not written beforehand like a blueprint or a production procedure. History, and every social story involving different actors, is written afterwards, in retrospection, and often not even by those who act in it but by an outsider. Everybody is the author of his own actions or reactions, but not of the complete story. The complete story – all interconnecting actions, reactions and consequences – becomes clear only when it is more or less finished, afterwards, when we can know how it was and what the reactions and consequences have been.[2]

In the words of Hegel: the owl of Minerva, the symbol of wisdom, only flies out at dusk. The actor, contrary to the author, looks forward or better tries to look forward, and by definition knows less than the author of history. It was Kierkegaard who said that life can only be understood backwards, although it must be lived forwards.

Kierkegaard

Kierkegaard

Of course, history is not entirely unpredictable. We can guess. We can try, on the basis of the past, to identify some trends, patterns, regularities etc., and hope that they will hold for the future. Some guesses are better than others. Also, contrary to the criticism of Arendt, there is sometimes creation or “production” in history. Some actions do not encounter reaction and unfold as planned beforehand. These stories do not result from the game of action and reaction or from a plurality of separate and contradictory desires. They result from one desire and one goal. In some instances, people have a goal, a desire, and can realize it in a predictable and controlled manner, without or notwithstanding reactions. Life would not be worth living without such stories. Sometimes, people have a grip on the future. Politics is also impossible without a consensus on a purpose.

Suppose we think of ruling as being an exercise of power. For someone to exercise power is for their wishes to be effective. So someone is a ruler if it is the case that what happens happens because it is in accordance with their wishes. If, then, the people rule, this means that the people’s wishes are effective.[3]

Somebody who is in power has a desire and realizes this desire. Otherwise it cannot be said that this person has power.

However, such kind predictability is probably the exception. History in its entirety and many parts of it can never be a creation, a simple purpose or the realization of a plan, a process or an evolution. History and most of its parts are the result of different and contradictory actions, reactions, desires and goals interfering with each other. Therefore, the idea of progress has to be limited. There may be fields of progress, but these evolutions are counteracted by reactions and other evolutions. Progress is never global or certain or predictable.

Not even one’s personal history is written or produced entirely by the person in question. And since our identity is perhaps the same thing as our personal history, our identity is not entirely the product of our own actions and decisions either. It is also the product of the things that happened to us and of the actions and reactions of others. We act, we strive to achieve goals, but there is a plurality of goals. The single, uniform goal, either in overall history (e.g. the overall goal of progress, communism or democracy dragging people along) or in many small or personal histories, is a pipe dream. Plurality results in things happening to us, things that we cannot control or foresee but which shape our lives, histories and personalities irrespective of our will.

History and most of its parts are not made by man, but they are not made by any other force either. I do not believe that God or Fate or the Economy or whatever makes history. History is to a large extent if not entirely the result of consciously chosen human actions and reactions. Consequently, people remain responsible for their actions, although not for all the consequences of their actions. They cannot claim that things happen because God or Nature (the genes for example) or Race or Culture (the unconscious national character) or Fate or whatever wants these things to happen or causes people to make them happen. People are relatively free. Most of their actions are not caused by some necessary force outside of them (or inside of them, for that matter, but beyond their power).

In order to remedy the defects of plurality – uncertainty, unpredictability and the powerlessness which this implies – one can try to eliminate plurality. Reactions and contradictions are excluded (and maybe “reactionaries” are persecuted) and all actions are focused on one and the same goal. Instead of the plurality of individual projects, we get a collective project. Individuality disappears.

North Koreans perform during the country's famed Arirang Mass Games. The games are the world's biggest choreographed extravaganza, part circus act, part rhythmic gymnastics floor, with plenty of reverence for North Korean leader Kim Jong-il. Picture taken October 14, 2005. REUTERS/Reinhard Krause

North Koreans perform during the country's famed Arirang Mass Games. The games are the world's biggest choreographed extravaganza, part circus act, part rhythmic gymnastics floor, with plenty of reverence for North Korean leader Kim Jong-il. Picture taken October 14, 2005. REUTERS/Reinhard Krause

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“Le groupe en fusion” (Sartre) or “la volonté générale” (Rousseau) implies that the individual individual is absorbed by the community. Everybody’s individual goals or desires must be harmonized with the collective one. Every action is forced into a coherent whole. The individual will is discredited. It is egoistic, focused on the short term, subjective, reactionary; it is useless and powerless because of the contradictions with other individual wills; or it is futile because contrary to the trend of History or the forces of Biology etc. If the individual is only a part of a whole, then he can be sacrificed for the whole. Individual rights become less important. At best, people are interchangeable, specimen instead of unique individuals; at worst, they are eliminated.

As many successful dictators have shown, eliminating reaction will indeed make it possible to control the future, to remain in control of an action, to enforce certain consequences, to realize goals, to make history like an artifact or to write history like a novel.[4] It makes it possible to know the future, to know how things will turn out, to put a clear purpose in history, a plan which unfolds exactly as it was contemplated beforehand, a clean process rather than a volatile and uncertain multi-directional chaos. If there are no reactions and only one general will, then all actions go in the same direction and toward the same goal, and only nature or inactivity can thwart our plans (hence the dictatorial need for “mobilization”). We can with much greater certainty predict the future and the realization of our plans. The expected consequences are the actual consequences. We are masters of the consequences and we control the future.

This has always been the great selling point of authoritarian government. Compared to the chaos of democracy, the “strong man” can be very efficient. I’ve refuted this here. Democracy indeed doesn’t offer predictability, precisely because it guarantees plurality. The common will of a democratic majority can be undone by reactions of the minority, by the reactions of a future majority, or by some outside force. Predictability requires unanimity rather than majority, if possible global unanimity (dictatorships are therefore often imperialistic). Only a unanimous group can have power as it was described above: power means that wishes are effective, that things happen because they are in accordance with wishes. A majority can only have limited effectiveness, effectiveness limited by future majorities and by the reactions of minorities (in a democracy, minorities have some power, e.g. their rights cannot be violated by the will of the majority). Of course, unanimity is often obtained by force: reactions are forcibly suppressed because unanimity of convictions and goals is a rare occurrence. Force then produces power, although Arendt, again, has something to say about the confusion between these two terms.

A democracy does not try to suppress or eliminate reactions and contradictions. On the contrary, it fosters them. But it does try to ritualize and soften them, take the violence out of them, because they can take a nasty turn. Democracy needs conflicts, opposition, criticism, plurality etc. It is the game of action and reaction institutionalized and accepted as an inevitable fact of life in a community with different people and different goals. It cannot exist without events initiated by some and reacted upon by others. Hence democracy embraces uncertainty and unpredictability, however unpopular and perhaps ineffective this may be.

However, democracy also needs some level of predictability. It wants to be certain of its own survival and that is why it accepts only opposition within the system. It tries to eliminate anti-democratic reaction and opposition and asks people to promise respect for democratic values. Promises produce some certainty, a certainty and predictability based on freedom and free choice, which is not the case with certainty produced by the elimination of reaction. In a tyranny, everybody is certain that the regime will survive because nobody can or dares to react, or because indoctrination and propaganda have conditioned people in such a way that they do not even contemplate reaction. In a democracy, there is relative certainty because enough people keep their promise to respect the regime. This is the rationale behind the so-called “pledges of allegiance”. Promises are based on freedom, because a promise is only valid if it is voluntary.

Pledge of Allegiance

Pledge of Allegiance

Of course, this does not mean that everything in a democracy is free and voluntary. Although a democracy wants to limit coercion as much as possible and tries to secure its future by way of promises, education, persuasion, judicial review etc., there has to be some coercion because some people will not make or keep the necessary promises. There will be coercion, not of promises, but of actions. Promises cannot be coerced. Coercion in this case is the use of force against anti-democratic reaction.

An anti-democratic reaction is a contradiction in terms. It is because of democracy that reaction is possible. If reaction becomes an activity without risk, as is the case in a democracy, then reaction blossoms. Reacting against democracy is not only ungrateful, it is self-destructive.

But apart from this predictability of the institutions necessary for unpredictable political life, it is clear that the focus of democracy is on conflict, contradictions, opposition, reactions, unpredictability and uncertainty. Those who want to limit the game of action and reaction are necessarily anti-democratic. More freedom and more democracy means more reaction, more plurality, more kinds of actions which can interfere with each other, and therefore more unpredictability, less control over the future, and less certainty that goals will be achieved. Democracy does not only accept the game of action and reaction as an inevitable fact of social life. It also promotes this game, as long as it remains a game and does not become violent or a threat to democracy or to people’s rights and freedom.

Counter-intuitively, freedom does not always go hand in hand with control, although on an individual level this may be the rule. An individual is free if he controls his life. But a society is not free if people try to control consequences and the future. Unpredictability does not mean that people are not free to choose their future. They are just not certain that the future will be the one they have chosen. It’s when they want this certainty that they are tempted to destroy the freedom of society. When people want to be certain of their goals and want to be in control – when, in other words, they want to be free – they need to eliminate interference from other people and other goals. Other people with other goals become a nuisance, and their freedom has to be sacrificed. However, this may not result in control. It is far from certain that the elimination of reaction is possible. It may be counterproductive and create more reaction than initially anticipated. Plurality is probably unavoidable.

[1] M. de Montaigne, Four Essays, Penuin Books, Harmondsworth, 1993, p. 57-59.
[2] H. Arendt, Condition de l’homme moderne, Paris: Calmann-Lévy, 1983, p. 26.
[3] R. Harrison, Democracy, Routledge, London/New York, 1996, p. 4.
[4] H. Arendt, Condition de l’homme moderne, op. cit., p. 243-244.
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4 thoughts on “The Recession, the Economics Profession, and the Prediction of the Future

  1. Pingback: What is Democracy? (44): Predictability or Uncertainty? | P.a.p.-Blog | Human Rights Etc.

  2. Pingback: Political Graffiti (178): The Future is Unwritten | P.a.p.-Blog, Human Rights Etc.

  3. Pingback: The Ethics of Human Rights (66): Human Rights and “Spontaneous Order” | P.a.p.-Blog, Human Rights Etc.

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