Hayek vs Myrdal

In 1974, the Nobel Prize for Economics was awarded to two men- Gunnar Myrdal & Friedrich Hayek. Two women, Indira Gandhi & Margaret Thatcher caused a dramatic change in the reputation of both men. Myrdal's status fell when Indira Gandhi proved India was a 'hard', not a 'soft' state, while Thatcher openly said 'there is no such thing as Society'- thus demolishing the premise of Myrdal's Institutionalism- and that Hayek was right- only markets could efficiently aggregate information.

In his Nobel lecture, Myrdal said-

Our knowledge, as well as our ignorance, at any time and on every issue, tends to be opportunistically conditioned,

i.e. they are determined by incentives 

and thus brought to deviate from full truth.

Which is why the Market approach is better than the Institutionalist approach. Open Markets are almost instantaneously updated and hence 'error accumulation' is lower. 

In every epoch and every problem, this opportunistic tendency operates also in our scientific work, if not critically scrutinized.

Even if scrutinized. If you say to an Economist 'you only focus on the Stock Market because there's a lot of money there. There's no money to be made in studying the market for second hand farts which is why you avoid my own specialty' he will happily agree that he gets paid quite well precisely because he focuses on the Stock Market rather than at what price my farts are resold. (I bet it is very high. That's why it is so generous of me to give them away for free.)

This view dawned upon me more than forty years ago, when I analyzed the political element in the development of economic theory.

When you leave University, you realize there is a market for Economic theories of various types. Sadly, the price for your own specialization may be negative.  

I have then over the years found this hypothesis confirmed by my studies in many different fields and, of course, during my ten years as Executive Secretary of the United Nations Economic Commission for Europe, responsible for operational work in relations with governments, as well as for research.

He who pays the piper calls the tune. But if the tune is horrible people run away and the guy paying the piper finds he is regarded as a pariah. Nobody buys stuff from him. He goes bankrupt. 

This is why 'Conventional Wisdom', in Econ, isn't 'Institutional'. It is Market driven. As markets were liberated from the Bretton Woods strait-jacket, Hayek's star rose while Myrdal's fell.  

When I am now working on a study of the broad social and economic dynamics of race relations in the United States

nobody was interested in what this elderly Swede or Turnip had to say. Back in the Thirties, he had a little salience coz he was as White as Fuck. Also, his policy recommendations back in Sweden were proto-Keynesian. Thus, in New Deal America, this sedulous student of American Institutionalists like John R Commons, was encouraged to write a book about 'Negros'.

since the time, more than thirty years ago, when I wrote An American Dilemma

the Carnegie Corporation spent a quarter of a million dollars on this. Myrdal was brought in because hee had studied in America and was a Swedish statesman of some repute. Ralph Bunche, who received the Nobel Peace prize in 1950, did much of the research for the book.  

it has struck me how different the whole outlook on the world could be during the late Roosevelt era, compared with now. In most respects the world issues seemed to be, and in a sense were then, simpler, much less complex.

Get the police to beat up and incarcerate Commie nutters. Don't rely on black-shirts or brown-shirts to do it. Them guys be kray kray.  

Leaving all other differences aside, what then was referred to by the static term the “backward regions” were held at rest, within the colonial power structure.

Nonsense! Many industrialized countries had 'backward regions' where squirrel hunting and sister fucking were the two main occupations. They were welcome to supply cheap labour to filthy Mill towns.  

Their continued economic stagnation in great poverty was taken for granted,

Rubbish! People could see that factories were coming up in Bombay and Shanghai and so forth. There was already an anti 'Sweated Labour' lobby in England in the Twenties. But, even prior to that there had been 'Yellow Peril' legislation against the influx of coolie labour in the US. 

without exerting much interest on the part of the public in the rich countries, nor among their economic scientists.

No. Missionaries were always gassing on about how to raise productivity amongst those you converted in 'backward areas'. The 'rice bag' Christian must be trained to earn more and more money otherwise the proselytization of his country will fail for lack of endogenously generated resources. Interestingly, one text the Missionaries translated and circulated had to do with the manner in which Ninomiya had raised productivity in rural, bakufu, Japan. Perhaps, they believed Ninomiya belonged to Japan's 'underground' Christian tradition. 

Perhaps the most important effect of World War II was the rapid dissolution of that power structure – although not having been part of the war aims of any belligerent country

the USSR always supported de-colonization. 

and not expected anywhere.

by a stupid Swede or Turnip. The fact is America had decided to pull out of the Philippines in the Thirties while the Tory 1935 Government of India Act permitted de facto Dominion Status if the Indians managed to agree to form a Federal Government at the Centre.  

Beginning with the quasivoluntary decolonization of the British dependencies on the Indian subcontinent and the rest of South Asia,

France and Holland tried to keep their colonies in South East Asia. But the game was not worth the candle. The Portuguese too tried to hang on to their colonies thus falling behind even Franco's Spain.  

it swept over the globe like a hurricane, reaching also regions where there had been virtually no indigenous liberation movement foreboding and, in some measure, preparing for the change. The result was the coming into existence in a rapid sequence of a great number of new, politically independent countries, which all were very poor and mostly stagnant, economically and socially, but where the educated elite, who thought and acted on their behalf, now raised the demand for development.

From whom? If you have become 'independent' you can't demand that your former master return and 'develop' you. I suppose what Myrdal means is that under Bretton Woods, because capital flows were regulated by Governments, some multi-lateral mechanism was required to take the place of Free Market f.d.i. & technology transfer. Some hapless bureaucrat, like Myrdal, would have to meet darkies who demanded 'Development'- i.e. turnkey projects- and do some virtue signalling as part of his job. 

In turn, as a subsequent effect of that political change the general public in the Western countries were suddenly forced to become aware of the huge income gap as between the poor majority of mankind and the rich minority,

They were already well aware of it- which is why 'Yellow Peril' arguments worked. The UK put up immigration barriers against Russian Jews precisely because they were poor and their arrival might drive down wages. In America, the White working man had been told for many decades that the thrifty 'Asiatic' was habituated to getting by on one tenth of the average wage. Clearly, if there was unrestricted immigration of Asiatics, wages would be driven down.  In France during the Great War and in the inter-war years, there were in fact Chinese 'guest-workers'. My point is, there was an acute awareness of the poverty of Asia & Africa. Indeed, after the Great War, one motivation for setting up an International Labour Organization was to prevent 'low wage' competition from such countries. Incidentally, Japan was as poor as fuck when it first entered global manufacturing markets. 

as well as the further fact that this income gap is continually widening, as indeed it had been doing for more than a century. An isolating wall of inattention, and an ignorance made possible by that opportunistic bent of mind, had been broken through.

Rubbish! The Churches which sent out Missionaries made a point of indoctrinating little kiddies back home that they should hand over a portion of their pocket money not just to save the souls of little brown babies but also to keep them alive with a little gruel. It must be said, back then doing 'Development' in Africa/Asia meant moving there and sharing the discomforts of the local people. This was fine if there was a Heavenly reward but it did not enthuse bureaucrats with PhDs in Econ. They wanted a way to virtue signal without having to stray very far from home comforts or such luxuries as 5 star hotels in Third World countries could provide.  

The poverty of what now came to be known as “underdeveloped countries”,

like Russia. Stalin was admired because he had turned a backward, agricultural, nation troubled by famine in the 1890s, into a Super-Power with nukes and Sputniks. 

a dynamic term, became recognized to be a problem. This represented a momentous redirection of public interest.

Not really. Working people may have looked askance at 'Overseas Aid' but their leaders explained to them that the thing was a con. If you had a shitty industry, you got the taxpayer to pay for it so as to preserve jobs, and then gave the shit away to darkies who didn't know it was shit. 

Within this movement there went also an equally radical redirection of economic research, for the first time giving importance to these countries’ abject poverty and also to the policy methods, which could initiate progress there by planning for development.

There was a Cold War aspect to Aid. If you were helping a smart country- Japan, South Korea, Taiwan etc- then their industrial rise meant you gained a bigger arsenal for a cheaper price. If you were pretending to help a stupid country- you could send them Myrdal or some such virtue signalling cretin.  

This new awareness of the poverty in underdeveloped countries was bound to be morally disturbing in the Western world, where, particularly since Enlightenment, the ideal of greater equality has had an honored place in social philosophy.

Political equality- maybe. Economic equality would have meant nobody could afford University fees and there would be no elite of any type. Also, Churches would be suppressed. Enlightened people don't believe in God or Heaven or Hell.  

In economic science it had even been “proven” and placed at the basis of economic theory.

Perhaps Myrdal means that the 'diminishing marginal utility of money' implied consent to progressive taxation. Sadly, you can only tax factors in inelastic supply- i.e. rents can be redistributed though the process of redistribution itself yields rents and rent contestation. Anne Kreuger who began to visit India towards the end of the Sixties saw nothing but rent-seeking there. Myrdal hadn't seen it at all. Why? Anne talked to Indian businessmen. Myrdal talked to Nehru and repeated his silly ideas in a speech to the Lok Sabha. Perhaps, that was part of his job. But it was a shitty job.  

The influence on practical policy of that recognized ideal had been minor, however, until towards the end of the last century economic conditions and power relations in one Western country after another began to make possible gradually to turn them into “welfare states.”

because they also needed to be 'warfare states'. The proletariat serves the State only by reproducing itself. The moment warfare can't be left to a professional warrior caste and conscription and 'careers open to talent' in the military become absolutely vital to national security, the industrial proletariat must be vested with rents so as to have an incentive to protect the regime. (The agricultural worker can be bought off with a bit of 'land reform'. Peasant proprietors have a stake in Society.) 

This process also implied greater awareness of existing inequalities.

i.e. having eyes in your head.  

From the beginning we find also that among the new policy proposals of economists aimed at instigating development in the underdeveloped countries, besides the prescriptions for economic planning, there was included a demand for economic assistance from the developed countries.

Because of the Bretton Woods strait-jacket. Most countries had Exchange Controls. Sweden only got rid of its foreign currency controls in 1989.  

In fact, much of the writings of economists in that early stage of the postwar era, as in many cases even later, became focused upon urging the politicians and the general public in the developed countries to be prepared to come forward with technical assistance, capital aid, and commercial concessions.

Otherwise, more and more countries would accept 'Socialist division of labour' and trade with the Soviet bloc. Vital raw materials might be denied to NATO. 

The real 'demand' of the 'Global South' was for fairer terms of trade. They could secure this only through cartelization as OPEC showed. But that meant curtains for Bretton Woods. It also meant curtains for the Soviet Union. Rooskis woke up to the fact that they could get rich trading on open markets rather than swopping oil for Cuban sugar so as to keep Castro comfortable 

This was a new element in Western thinking. Until then, the colonial power system had served as a protective shield for consciences in Western developed countries.

No. Colonial power had meant direct control of raw materials. That shield was gone. Some transfers were necessary to prevent countries signing up with the Kremlin. But the bigger threat was cartelization by primary producers. Consider Iran. It had suffered two famines during two world wars because Britain needed its oil. This was also the reason Mossadegh was toppled. But what was the upshot? The Shah became a prime mover in the creation of OPEC. The tables were turned.  Suddenly India- which had supplied Britain with the soldiers they had used in Iran during both World Wars- was tying up with Iran to develop Kudremukh. Bilateral Development projects didn't need to pretend to be about equality or democracy or being nice to darkies. 

There anyhow existed no political basis for sensing any degree of collective international responsibility for what happened in the colonial dependiencies of some West European countries, for instance no surge for a discussion in the League of Nations about how to help them to develop.

The League was useless. But there was developmental thinking in UK by the late Thirties. This increased during the War. Why? Resources were needed to defeat Hitler & Tojo and, after the War, resources would be needed to maintain threat points during the Cold War. British soldiers helped Malaysia rid itself of Commies. The Malaysian five year plans were perfectly sensible. Their current one focuses on AI.  

And the otherwise highly idealistic charter of the United Nations, drawn up before the end of World War II, had little to say about the right to political independence for the peoples in the “backward regions.” The Charter was still less outspoken about how to spur and aid development in the underdeveloped countries that would come to emerge.

Fuck the UN. It was always useless. Way too many Scandinavian shitheads ended up in its bureaucracy.  

But almost from the beginning, the United Nations and its specialized agencies became now the sounding boards for demands, raised by the representatives of the underdeveloped countries, for aid from, and commercial considerations of the developed countries.

Against the backdrop of the Cold War. Consider Pakistan. Its PM got invited to the US after Stalin invited him to Moscow. Talk of 'Development' was just cover for buying support in the newly independent nations. You never knew when their territory or resources might become strategically important. Pakistan got a lot of aid because it provided bases for American U2 flights over the Soviet Union. America needed to know how successful the Soviet nuclear program was. But the Soviets wanted the Americans to know the truth and what's more wanted the Americans to know the Soviets knew they American knew. The World had become game-theoretic. Myrdal was a walking dinosaur.  

During the three decades of its existence, the effectiveness of the United Nations has, on the whole, tended to decrease, particularly in the field of peace and security and, more generally, all issues in which the developed countries feel they have important stakes. But this whole system of intergovernmental organizations has more and more become agencies for discussing, analyzing, and promoting development in underdeveloped countries.

Is the UNDP any good? No. Still, it provides jobs to some nice people. It is important to remember that all countries have some useless diplomats and other bureaucrats who can't be sacked. But they can be shunted off to the UN. Also small countries need some place safe to store their useless ex-leaders. Again, International Organizations come in handy.  The alternative is Tony Blair or BoJo jetting around the place making money off shady Dictators. 

Their secretariats produce statistics and studies aimed at ascertaining, analyzing, demonstrating, and publicizing the pertinent elements of their poverty and the possible means of lifting them out of it. This is part of the process through which a compelling awareness of their plight has been engendered in the postwar period and forced itself upon every alert person.

Hilarious! Alert peeps know Statistics be shite. Still, it is true that Joe Lunchpail spends a lot time examining Econometric evidence that starving peeps in shithole countries aren't doing well economically. 

Myrdal says he wasn't always stupid- 

in the middle of the Fifties, I delivered a series of lectures in Cairo focused on the same topic as my present lecture (later published in a volume, Economic Theory and Underdeveloped Regions), and in spite of my already then having attempted to redirect my thinking in an institutional direction, I could assert:

“What is needed is not primarily a redistribution of wealth and incomes. Indeed, aid can only be a very small part of a rational international equalization program… None of the schemes which have been propounded for capital aid for development of underdeveloped countries has ever amounted to taking away more than a tiny fraction of the yearly increase of national income per head in the richer countries, which implied that no real sacrifice has ever been envisaged… A wholesale income equalization by redistribution between nations is both impossible and, I am inclined to believe, an unimportant objective.”

Nobody had any such objective anymore than it was their stated aim that billionaires submit to buggery by beggars.  

My theory is that the selfish national interests, particularly as they so often turn out to have been spurious and misconceived, do not appeal to ordinary people, who in our type of countries determine the course of public policy over the years, while a motivation in moral terms carries weight.

The Abolitionists were moral and did carry weight. People did subscribe to Charities which were known to help starving people in distant places. Herbert Hoover had done much in this field. He became POTUS. A guy helping lepers in darkest Africa was considered a saint. Money flowed to Charities of this sort. It was only when the State (because of the War, or post-War reconstruction) took over more of the economy that what had previously been done by privately had to be done publicly. But there was no good reason why the Public Sector should not be pruned back so that 'consumer sovereignty' could be restored. Indeed, Myrdal's own Sweden would regret not having taken this course earlier.

A few of the underdeveloped countries, those having oil for export, have succeeded to form an effective cartel, the Organization of the Petroleum Exporting Countries, raising the price of oil four and a half to six and a half times the earlier price, depending upon what base year is chosen for comparison. They have suddenly become immensely rich. Except a few of them, like Nigeria and Indonesia, they were among the richer of the underdeveloped countries already before, or at least not so poor.

Some OPEC countries would import labour and remittances would loosen the foreign currency constraint for the countries where they came from. Also remittances were often used by families to improve health, educational and housing outcomes. This boosted the service sector and had a multiplier effect leading to higher 'Human Development' indices and positive 'mimetic' effects.  

 the other commodity exporting underdeveloped countries will probably not succeed to follow the same pattern to any considerable extent.

But they can try to add value at home and then export- e.g. Kerala exporting sea-food and other 'ready meals' to migrants in the Gulf and elsewhere. Labour mobility by itself creates some Capital, Enterprise and Technology mobility.  Intriguingly, the networks thus created may be broader and more agile than that of established elites. 

Myrdal shows awareness of the food deficit in India & Bangladesh. It is estimated that there may have been half a million to a million and a half famine deaths in Bangladesh in that year. Sheikh Mujib's Socialist policies certainly worsened the effect of the food availability deficit. Since then Bangladesh has quadrupled food output and greatly raised the participation rate for women in manufacturing. In the early Eighties they even did a bit of 'privatisation'. Myint & Bauer, not Myrdal, were on the right side of this debate. 

Myrdal expresses distaste for 

 the concept “triage” (from the French “trier”: to soft), following out an analogy from the practice in the allied medical tents during the trench warfare slaughters of World War I. With resources limited, a distinction had been made between those likely to die no matter what was done to them, those who would probably recover even if untreated, and those who would survive if cared for. The third group alone received attention. The others were left to live, or to die, on their own.

What was the alternative? France was fighting for its life. Only those soldiers who could return to the battlefield were helped- unless they would recover anyway in which case they were left to get on with it.  

Based on such an analogy, India is in this literature commonly counted as belonging to the first group,

It was obvious that it was in the third group. Pretending an agricultural country can't feed itself is silly. Still, the ruling party didn't want dominant peasant castes to start rising in prosperity through the use of hybrid seeds, fertilizers, tractors etc. Why? They would vote for their own people not dudes who went to Cambridge.  

which should be left unaided, but also many other very poor countries. Not giving them food aid is more “ethical” so the argument runs, because those who would be saved will breed, and in the end still more millions will ultimately be starving and dying. In the longer run, aid creates more misery than it alleviates.

Also Aid can work like a 'resource curse'. It can have a substantial 'crowding out' effect.  On the other hand, aid to people suffering the effects of war or natural disaster is simply a case of 'risk pooling'. Also, it makes sense to over-supply essential items so 'buffer stocks' are available. Run them down from time to time. This is a simple case of 'regret minimization'. As I have explained elsewhere, if the people of Sodom & Gomorrah had been rational, they would have had a rule to help- not refuse to help- the needy. You can only be sure there is an effective buffer stock, if it is drawn upon to feed 'outsiders'. True, if there is a deficit, those outsiders will starve. But you will be fed. Entitlements are always defeasible. But so are norms. Under exigent circumstances, benefits are rationed with 'insiders' getting everything and 'outsiders' getting nothing. 

The triage theory is not advocating less aid from the rich countries, only that it be distributed more wisely by cutting out from consideration those that are helpless.

No harm in dumping buffer stocks on the hopeless. This enables the stock to be replenished. In this case Aid is not a curse since there was no possibility that its recipients could have grown their own food. Only when we face a supply shock will we laugh heartily while they starve to death. They have served our purpose and are now welcome to perish.  

It has often been wrongly assumed that farming in underdeveloped countries is labor intensive, as an inference from the very large portion of the total labor force sustained in agriculture – in India, which is not selfsupporting in food, about 70 per cent.

Thanks to Borlaug & Swaminathan it did become so by about 1977.  

In fact their farming is extensive. Too few work at all, those who work do it for too short periods during the day, week, month and year, and they work too inefficiently.

Unless their labour is better remunerated. The Green Revolution made manual labour in agriculture better paid. This meant the transfer of earnings of manual workers went up. This then meant alternative employment had to have higher marginal product- i.e. productivity there had to rise- with the result that real wages for all physical labour tended to rise. There were plenty of comments about how 'uppity' rural workers were becoming back then. But they were also more productive. If you actually do something useful in return for higher pay, you can go elsewhere and do that work for almost the same pay without having to say 'Ji Huzoor' to the boss. Moreover, to retain labour you had to pay a premium even to the chap who looks you in the eye and thinks you are no better than he is. But, because your profits have increased, you no longer care about being 'Ji Huzoored'. You are now focussed on 'keeping up with the Joneses'. 

In the 1950s, Albert Mayer's Etawah project succeeded because it introduced a new higher yielding crop strain. Sadly, this was not obvious to some economists. They thought the key was 'community organization' or some such shibboleth. The truth is, A.O Hume (later the founder of the Indian National Congress) had been the Collector of Etawah. He had started many schools, a couple of newspapers, and encouraged new agricultural techniques. The support of the Administration did make a difference to outcomes. But when a less intelligent or hard working Collector was posted, Etawah sank back. Hulme understood that Indian notables in the District should provide the continuity to ensure incremental progress. His pal Mayo and then Ripon agreed. In the 1880s there was a scheme for local government boards with educated Indians taking on more and more tasks. Again in 1920, there was a 'devolution' scheme. The problem was the ruling Party. If it could win without doing 'development', why bother with it? The moment local politics becomes a matter of deciding whether to build a school or spend the money on irrigation, talk of 'Ahimsa' or 'Shoshialism' becomes otiose. Furthermore, your caste/communal vote-bank politics might be challenged by cadre-based parties which recruit smart people who want the value of their property in the district to go up. To be clear, that is FASCISM! It is very evil. If trains run on time, Mussolini has won! If a municipality does smart things and property values rise, incomes rise, the place stinks a little less- then FASCISM has triumphed! Furthermore, in a Hindu area, it will be noticeable that those who have benefited most are well-off Hindus! This shows that Muslims have been secretly slaughtered. 

There were good Chief Ministers who, because of their own social background, helped improve matters. Prakash Singh Kairon got an MA in Poli Sci from US. It was USeless. But the manual work he did on farms there paid off. He helped turn East Punjab from a food deficit shithole to a granary with mushrooming light industry. Maybe he was corrupt, nepotistic etc (he was killed because he was believed to have pressurised a Judge to send a man to jail) but there was no reason why the good things he did should not have been emulated. I recall asking a Sikh economist, back in the Nineties, whether there was any monograph on Kairon's contribution I could read. He didn't know. But he told me a story of the late British economist, Ajith Singh, having been denied the Student President post because some nephew of Kairon wanted it. This caused the young Ajith to quit the country and go off to America. This was a pity. Sikh economists have served India well. Swedes or Turnips haven't. 

Already without any other technology than what is already known and applied by some of the farmers in a district, yields could be increased substantially by raising the labor input and its efficiency.

Because you don't have to pay labour. You can just tell it to input more of itself and it will be happy to oblige.  

A large part of that labor input should rationally be directed upon cooperative public work, improving the land, building more and better roads,

launching Spacecraft so as to benefit research in Astrophysics 

constructing wells, irrigation ditches and storage facilities, and generally ameliorating the environment for life and work in the villages.

Why stop there? Why not raise the input of labour in an Indian village to a level where the inhabitants of distant planets are provided with stylish flying saucers?  

Jan Myrdal, Gunnar's son, has thrown a harsh light on his parents personalities and activities. I think he himself linked this to the early Swedish 'National Socialist' and 'geopolitical' theories of Rudolph Kjellen. This is the substructure to Gunnar's systematic stupidity which was disguised by his thorough self-education in Economics (his original qualification was in law) and what appeared to be a 'positivist' eagerness to do field-work, compile statistics, and so forth. His later 'development' work could be dismissed as a case of 'the White Man's burden'. But such was not the case. As his Nobel lecture makes clear he actually had shit for brains. 

Instead of a summary of his contribution to Economics- i.e. a succinct statement of axioms, theorems, policy recommendations & Statistical evidence- we have hysterical drivel about 'the Equality issue in World Development' as if poor countries were demanding a World Government which would redistribute income. The truth is inequality is a driver for mimetics which is how 'low hanging fruit' are plucked by the poorer who grow more quickly in consequence. Their relative Income rises but real income in the rich countries rises because more stuff is being produced more cheaply. There may also be a wealth effect in the rich country which invests in the poor country. There may be convergence or even over-taking. In other words, the same thing happens globally as happens within a country or, indeed, a district. 

Myrdal concludes thus-

As an institutional economist, compelled to conceive of development as a movement of a whole political, social and economic system

Myrdal should have followed Commons by looking at the legal basis of Indian society. This meant looking at property title, contract enforcement, legal penalties for malfeasance in financial and other markets, speed of criminal proceedings etc. The Indian judiciary was already in decline but 'institutional' fixes could have been suggested. Indian industry faced a problem of Mundhra type speculators and shady deals enabling 'capital flight' and asset stripping or fraudulent conversion in firms which were taken over in an illegal manner. The Congress party was itself an institution which could have reformed itself from below rather than by the 'Kamraj plan' which was disastrous. In this way the political incentive to back the Green Revolution and then to back industrialization and urbanization would have been created. Development means you can have a much bigger 'rent' while the excess burden of the restriction or regulation which creates the rent is small. Moreover, welfare schemes based on 'risk pooling' reduce uncertainty and boost economic activity. Institutions for this- themselves creating clerical jobs- could more than 'pay for themselves'. In other words instead of wasting money on virtue signalling, institutions could have set in motion 'virtuous circles'. 

Sadly, Myrdal's Manichaean morality forbade any such thing. 

and having tried to deal with the problems in a world setting, I have had to express judgments on a very wide variety of human conditions.

e.g. be nice! It is wrong to let darkies starve! 

Although I have put labor into basing these judgments upon a more intensive realistic study than I can account for in this lecture, most of them remain tentative and anyhow far from being certain, exact and precise.

They were nonsense.  

This is not my fault but is due, first, to the fact that many of the conditions I have been speaking of are difficult already to define appropriately,

it is your fault if you, as an economist, chose to talk about stuff which is difficult to quantify 

and the further fact that the coefficients of interrelations between all changes of conditions within the system are very seldom known with quantitative precision.

Which is why, in these matters, we may as well consult a mystic rather than waste money hiring an economist 

The analyst is left to use whatever knowledge he can acquire, even if it is not in the precise form that economists have been trying to attain. When dealing with wider issues they often achieve it by limiting the scope of inquiry. This, of course, only makes the analysis less relevant, adequate and realistic, particularly in the present world tumult.

By contrast Hayek's analysis had become relevant. His lecture is titled '

The Pretence of Knowledge

An analysis which is 'less relevant, adequate and realistic' isn't knowledge. It is mere pretence.  

The particular occasion of this lecture, combined with the chief practical problem which economists have to face today, have made the choice of its topic almost inevitable. On the one hand the still recent establishment of the Nobel Memorial Prize in Economic Science marks a significant step in the process by which, in the opinion of the general public, economics has been conceded some of the dignity and prestige of the physical sciences. On the other hand, the economists are at this moment called upon to say how to extricate the free world from the serious threat of accelerating inflation which, it must be admitted, has been brought about by policies which the majority of economists recommended and even urged governments to pursue.

One could say the same of the sub-continent's food crisis. It was a 'supply side' not an 'institutional' problem. Supplying cheap inputs so high yielding strains could be cultivated was the solution. Sciencey guys & Accountants could get on with the job.  

We have indeed at the moment little cause for pride: as a profession we have made a mess of things.

Unless, they were in the private sector making millions. I'm kidding. Having a PhD in Econ made you stupid. Soros did have an MSc from the LSE. But it was in Philosophy. He got his start as a clerk in a Merchant Bank. 

Hayek ends his lecture on a positive note. There is no need for gloom- just a bit of humility. 

The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men’s fatal striving to control society

or to claim to understand it as the Institutionalists do. The fact is an 'evolutionary' process can't be understood as it unfolds because the fitness landscape features Knightian Uncertainty- and in any case there is hysteresis because of 'co-evolution'. Thus, the Institutionalist economist is engaging in a dismal type of  theology. He is not concerned with making the world a better place. He is scolding any Heaven we can envisage because maybe it won't be equal enough or diverse enough or offer sufficient opportunities for breast-beating. 

– a striving which makes him not only a tyrant over his fellows,

i.e. the fucking eggheads on the Planning Commission  

but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.

Institutions, too, are the creation of such 'free efforts'. Sad. 

Myrdal too strikes a note of hope as he concludes his lecture. But what he hopes for is yet more doom and gloom and breast beating.  

Even though my world view must be gloomy, I am hopeful about the development of our science.

It can become shittier.  

We can by immanent criticism in logical terms challenge our own thinking and cleanse it from opportunistic conformism.

Gunnar had been well paid to visit India, talk to Nehru, address the Lok Sabha, and write a big fat book about it. It would have been 'conformism' for him to do have done something to help the country. Still, he took the opportunity presented by his Nobel lecture to suggest that 750 million Indians would starve to death unless something more than 'triage' was offered them. This is because Indians are shit. Fuck can Institutional Econ do about shit?  

And we can widen our perspective. Everything can be studied. We are free to expand and perfect our knowledge about the world, only restricted by the number of scientists working and, of course, the degree of their diligence, brightness and their openness to fresh approaches.

Hayek ends his lecture by talking about ordinary people. It is their actions which create the economy. Economists might be helpful if they are humble and find some useful correlation to improve mechanism design or forecasting or simply save money. Myrdal ends his lecture by talking about 'scientists' like himself. He hopes there will be more such shitheads. That way the entire world will be fucked up and so his gloomy worldview will have been shown to be justified. 

Jason Smith's worthless Information Transfer Econ

Jason Smith is a Physicist who wants to 'use Claude Shannon’s insight about matching distributions on either side of a communication channel to match distributions of supply and demand on either side of market transactions.'

This is silly.

Markets are a solution to a coordination problem. They are not a channel of communication.

Prices may have a 'signalling' function if 'dis-coordination' games exist- i.e. there are arbitrageurs (which will only occur if there is 'hedging' and 'income effects' arise) 

However, for this to happen there has to be a noise generator.

(Otherwise expected 'income effects' are zero so no arbitrageurs exist.)

More pointedly, no information or preference aggregation occurs because it would represent a waste of resources.

Noise is a 'bad' for Information theory. It is vital for Market signalling.

Smith is a physicist. He wrote a blogpost on 'Evonomics' which begs for money to fund worthless shite like Smith's on the grounds that it is trying 'to make the world a better place'. It solves a coordination problem for stupid people who want to give away their money and stupid pedants who need to get paid to pose as saviours of humanity.

 Smith says- 'Let’s start with a set of people who want blueberries (demand) and a supply of blueberries. These represent complex multidimensional distributions based on all the factors that go into wanting blueberries (a blueberry superfood fad, advertising, individual preferences) and all the factors that go into having blueberries (weather, productivity of blueberry farms, investment).

Why is Smith is starting off with a situation where there is perfect inter-subjective information available to his auditors through some ubiquitous error free communication channel? Shannon's insights are useless here. Information Theory has no purchase. 

Perhaps he believes that there is a God who creates a distinct Universe at every moment. Furthermore, this God is under his control. So he says to this God- 'Start by creating a set of people with such and such preferences and endowments'. God may reply 'such people can't be the product of evolution. Under Natural Selection, there can be no unique 'complex, multidimensional' mathematical representation for what you ask. What you get is Red Queen races on Fitness landscapes. Indeed, it is nonsense to say 'people want blueberries'. They don't. Natural Selection endowed them with plasticity in this respect which is why they didn't go extinct. Please don't be so stupid. You begin with a premise which wholly vitiates the argument you are trying to make.' 

Smith isn't really making an argument. He's just displaying stupidity and ignorance because that's how we can make the world a better place- right?

In place of Hayek’s aggregation function, information theory lets us re-think the price mechanism’s relationship with information. A price vector is an information string. Simple. That's the relationship. Nothing more. Nothing less.

Stable prices mean a balance of crop failures and crop booms (supply), population declines and population booms (demand), speculation and risk-aversion (demand) — the distribution of demand for blueberries is equal to the distribution of the supply of blueberries. Nonsense! Stable prices means prices are stable. If we assume everybody has perfect information- i.e. an ubiquitous error free information channel is instantaneously available to everybody without any cost cognitive or otherwise, then, assuming convexity, no hedging, homogeniety, gross substitutability, etc, etc, then Smith wouldn't necessarily be telling stupid lies. However, there would also be no need for a market or prices or Information Theory or Physics or Mathematics.  Everybody would be a Leibnizian monad continually reflecting on the perfection of an Occasionalist God.

Prices represent information about the differences (or changes) in the distributions. And differences in distributions mean differences in information. Nope. Prices don't represent anything unless we make a bunch of assumptions which make Information Theory redundant. The truth is, the price vector is just an abstraction. All that matters is that bilateral transactions proceed. Everything else follows very quickly because evolution has hardwired us in a particular way. Thus overall we get a Hannan consistent result featuring arbitrage and evolutionary channelisation of diversity. This may look a Liebnizian outcome to pedants or polemicists, but it isn't. It is regret minimising.

In the remainder of his post, Smith appeals to the following two notions. Both fatally vitiate his argument

1) The principle of maximum entropy- this justifies Samuelson type Economics even in the absence of ergodicity. But if Samuelson type Econ is permissible, Muth Rationality must be even better. Hence, Information theory has no purchase because we always have a better discriminator than that of a

2) A Generative Adversarial Network.  The joke here is that availability cascade based shite like Smith's gets past its own peer review process. Why? Because it is 'second order', not alethic. It seeks to make the world a better place not by actually doing so but by asking for money to continue being a fucking parasite on rational discourse.

Sen, Szpilrajn & damaging Democracy.

Amartya Sen's Nobel Prize was for two very different things- one was his theory of famines which was wholly and mischievously wrong and the other was his well publicised belief that  'Democratic commitment' and 'Public Reason' have been greatly advanced by a theorem which either assumes P=NP (i.e. is ignorant) or else is based on a stupid and barefaced lie. 

This theorem (Arrow's Impossibility result) implies that if everyone prefers to have a deterministic Vote aggregating system which everybody agrees delivers results that are the 'best' in some objective, value-free, sense, though they may not be able to at all 'quickly' work out all the steps by which the result was arrived at, (i.e. there is only NP solvability) then, if this system were implemented, it wouldn't be Democratic at all.  What we would actually have is a Dictatorship!

 This theorem is easy to prove iff we define 'Dictator' as a guy who wants and knows what is best for Society- perhaps by some non deterministic procedure, or superior Ethical intuition or 'Divine' inspiration- and therefore makes the same choices as the ideal Bergsonian SWF or Perfect Voting rule. Clearly, the theorem is now a tautology- it poses no scandal unless we think P=NP in which case it is a puzzle as to why a deterministic SWF can't get the same result as a possible voter able to use non-deterministic methods. If, as is likely, P is not equal to NP, there is no scandal- just a tautology of a misleading and disingenuous kind.

Still, one can't deny, this is a very wonderful theorem because it can be also be used to prove the impossibility of my neighbour 's cat iff we define the tabby in question as an Arrowvian method of aggregating preferences which must satisfy certain 'seemingly reasonable' conditions specifically chosen so that the thing is impossible because one of the conditions is not reasonable at all but rather is utterly mad. Of course, we could achieve the same end just by lying. But where's the fun in that?

Sen's greatness lies in his deployment of certain bien pensant caveats which suggests that considerations of Social Welfare exceed economics and involve philosophical issues which may cash out as value judgements, or Samuelson type 'ethics', but not yet, never yet. Instead we should indulge in a type of 'Deliberative Democracy' which never decides anything, preferring instead to just go on repeating platitudes couched in specious arguments and supported by bare-faced lies.

However, if philosophical issues really have salience- i.e. if some process of Public Reason can change Preferences, or motivate meta-preferences, in a manner such that, under ideal- perhaps Rawlsian- conditions, everybody would want the same outcome for Society- then, there could be a Platonic Guardian or Benthamite Oracle or Newcombe Predictor who arrived at the same conclusion independently.

Since, by definition, such a person would be stigmatised as a Dictator if included in the voting process- and Arrow doesn't allow us to exclude such a person- Arrowian Non-Dictatorship would not be a desirable property for a Collective Choice mechanism to boast. Why? Because it specifically bars the sort of outcome which would make it otherwise desirable. 

Had Sen simply said 'Arrow's SWF is not at all isomorphic to a Bergson-Samuelson type SWF and proves nothing except that if you define something which aint Dictatorial as Dictatorial all you have done is utter a stupid lie' then he wouldn't have gotten to an Academic position where he could tell stupid lies about the true cause of the Bengali famine without being laughed at in Oxford or spat upon in Calcutta.

Perhaps Sen couldn't, in good conscience, say any such thing. Maybe, he genuinely thinks Arrow's result implies something very important about the nature of Democracy- viz. that it is shite and so we should all continually talk shite coz that's Democratic and Civilised people are democratic so just get with the program and start talking shite immediately you great big Bengollywog you. Don't let the side down. The World is watching.

He wrote- 
The informational foundation of modern social choice theory relates to the basic democratic conviction that social judgements and public decisions must depend, in some transparent way, on individual preferences, broadly understood. 

What about the notion that 'Social judgements must depend on individual preferences' ? 

Is that what a truly modern social choice theory would counsel? 

Nope. To reduce vulnerability to predators and parasites, human beings should always try to baffle any preference revelation mechanism. Indeed, not knowing one's own preferences is a safer strategy- which is why Evolution has ensured that there is no Momus window into the heart even for one's own ego.
Similarly, it is better to have Social Judgements which are robust to moment to moment changes in preferences so that the Regulatory or Normative environment is predictable and reduces Uncertainty in formulating long term plans.

Since, Newcombe type problems have salience in many Social and Economic processes, Preference falsification shouldn't be cognitively dissonant- and, indeed, the evidence is, it isn't. Pedagogues who write books are constantly astonished that people are inconsistent. They may support Liberty for themselves but not for others whom they exploit. Such pedagogues attribute causality to soi disant Great Men who wrote some pamphlet long ago descrying this inconsistency. However, such people were dismissed as antagonomic cranks who were either guillotined or condemned to the Bastille of Pedagogy or whose heads were lost to the community by some self-selective process of impressment into the condition of being the galley slave of a Scholarship long since run aground.

Nobody does not know, it is cognitively costly to have rational, or even alethic, preferences over all Social options though 'self deception' in this respect is an Evolutionarily Stable Strategy. Indeed, for analogous reasons, regret minimisation would militate for big saltations or  discontinuities in Preference profiles. Meta-preferences should link to Tardean mimetic rules of a certain sort so that there is canalistion and capacitance diversity.

Ultimately, we have to recognise Preferences are just metaphysical tosh- like Utility functions. Social judgements shouldn't be based on them. Rather, there are canons specific to Judgement that collective Jurisprudence too should adhere to. The same point may be made about Public Decisions. To make them dependent on individual preferences is stupid. Rather they should conform to the canons specific to Public Administration. This is not to say that Information aggregation isn't important. It is, but more important yet is that Public Decisions are free of ambiguity, Agenda control problems, race hazard or concurrency problems and so forth.

Arrow's resurrection of Condorcet in the early Fifties has a certain Historical and Cultural significance. No doubt, back then, there was some point to pretending that mathematical logic could serve an ideological purpose. After all, at that time, Command Economies were spreading faster than Market economies. In the Sixties, following China's humiliating defeat of India, more and more ex-Colonies were choosing to go down the 'One-Party' path.

Those days are long gone. The Berlin Wall fell before Sen got his Nobel. But the Hayekian writing on the wall was clear to see by the beginning of the Eighties- i.e. the last time Arrowvian Social Choice Theory had a pulse. Since then, Chichilnisky and Saari have given us a notion of 'topological dictators' where utility functions are continuous. but the interpretation of the notion has nothing to do with 'Dictatorship' as opposed to Banzhaf Coleman type voting power. 

Currently, Democracy and the Rule of Law are sufficiently attractive in their own right. Mathematical logic can be excused the duty of telling stupid lies in this respect. Why? Rather than prove the existence of God, as in Godel, or the Hitler in the ballot box, as in Arrow, it has genuinely alethic, and therefore useful, things to do.

Sen doesn't. He is still saying shite like this- The emergence of this democratic instinct relates closely to the ideas and events that surrounded the European Enlightenment. Even though the pursuit of democratic social arrangements drew also on various earlier sources and inspirations, it received a definitive delineation and massive public acknowledgement only during the Enlightenment, particularly - but not exclusively - during the second half of the eighteenth century, which also saw the French Revolution and American independence...

Good to know that darker skinned people lacked any such 'democratic instinct'.
Why?
Obviously, darkies belong to a different species.
That's why they have different 'instincts'.

However, History teaches us that White people, too, lacked such instincts.

There never has been any, not utterly evanescent, polity where 'Social Judgements' and 'Public Decisions' were not 'protocol bound', subject to 'artificial reason' and wholly robust to changes in individual preferences save by Executive action whether ab ovo legitimate or retrospectively made so. Condorcet perished along with his chimeral mathematical schemes, while the seed of the lawyer John Adams went from strength to strength.

From time to time, a polity may decide that a particular Social Judgement or Public Decision should be made in a way which transparently depends on individual preferences. However the power to make that decision is not itself dependent on 'individual preferences'. It is dependent on authority granted by due process of Law. Whatever the outcome of any Social Choice process- whether it involve preference aggregation or not- it remains the case that it is subject to legal challenge and Judicial review. That's why, contra Sen, a Paretian illiberal is impossible- if 'self ownership' is a Liberal value. Even if everyone wants something abolished- e.g. my right to write this shite which I'd much rather not write so as gain greater utility by whining about the great injustice I've suffered by not being allowed to ventilate my impartial ignorance on this and every other issue- it still can't be abolished save if the Rule of Law is usurped by an arbitrary Dictatorship of some sort.

In any case, the fact is, no Direct or 'Deliberative' Democracy has ever existed.

There has only ever been either the Rule of Law or a Dictator whose word was such.

It is a separate matter that the dynamic benefits gained from the power to raise taxes at low cost of coercion have worked to extend the franchise in certain types of market economies. However, if public goods vital to the continuance of the polity can be paid for some other way- e.g. by a natural resource endowment- there is no biologically ordained or culturally determined 'democratic instinct' in the background militating for effective Democracy- no matter what the Constitution requires. No country has achieved or sustained Democracy without taxing its voters. Some States have greatly enriched their subjects but, so long as those subjects aren't paying for Public goods- no effective, as opposed to cosmetic, self-sustaining Democratic transition has occurred. 

That's why Putin's Russia is the way it is. It's also why Modi is trying to get the poor into the tax/transfer net. He knows India doesn't have a natural resource endowment. The only way kids as poor as he was can come up is if they pay the taxes which fund their civilizational rise. 

'In contemporary social choice theory, pioneered by Kenneth Arrow, this democratic value is absolutely central, and the discipline has continued to be loyal to this basic informational presumption. For example, when an axiomatic structure yields the existence of a dictator as a joint implication of chosen axioms that seemed plausible enough, this is immediately understood as something of a major embarrassment for that set of axioms, rather than being taken to be just fine on the ground that it is a logical corollary of axioms that have been already accepted and endorsed.

No axiomatic structure yields the existence of a dictator 'as a joint implication of chosen axioms'. Arrow defined a possible voter who always agrees with the Bergsonian SWF as a dictator. He arbitrarily restricted the SWF to the class of deterministic functions but allowed profiles to be non-deterministically verifiable solutions to the SWF. Clearly there is a P/NP type problem here and if Social Choice theory hadn't died long ago this would be the focus of research. Arrow's method doesn't make any stipulation about the time class of solutions so it has no real world application.  But for that same reason, we know it to be tautological nonsense featuring semantic dishonesty. His 'Dictator' arises from one of his axioms. It didn't arise from any combination of the others. It is independent, utterly arbitrary, and thus itself quintessentially 'Dictatorial'.

By Dictator, in ordinary English, we mean a guy who has power over others. What Arrow is describing could be a mute or accidental Oracle who has no power. Alternatively, his 'Dictator' could be a Judas Goat or even, as D.G.Saari suggested, a sort of social chameleon like Woody Allen in Zelig. 

If there is a Dictator in the common acceptation of the word, it would be a foolish waste of time to aggregate preferences or stipulate for 'independence of irrelevant alternatives' or 'Pareto optimality' or anything else. Only one guy matters. Talk of voting systems is stupid.

Did Sen really believe that Arrow's Dictator had power over others? Or did he not understand that the word 'Dictator' in English means a guy like Hitler or Stalin as opposed to someone who knows and votes for what is best for Society but who has no other power?

 We cannot begin to understand the intellectual challenge involved in Arrow's impossibility theorem without coming to grips with the focus on informational inclusiveness that goes with a democratic commitment, which is deeply offended by a dictatorial procedure. This is so, even when the dictatorial result is entailed by axiomatic requirements that seem reasonable, taking each axiom on its own.
A guy votes for a set of things. It turns out that the SWF chooses the same set of things. The guy didn't make the SWF choose those things. Where is the 'dictatorial procedure'? Why should anyone take offence? The thing could have happened by chance. Or it might result from this guy being genuinely more altruistic and knowledgeable than anyone else. It is political correctness gone mad to label someone wiser and better than others as a Dictator simply because there is an objective reason to think that person should be the Dictator. It's like taking offence at 'Brown privilege' on the basis that Brown people could have established hegemony over White people and therefore they actually did so and are thus guilty of a terrible crime and should just shut the fuck up while we moan about the horrible oppression they hypothetically could have inflicted. 

What should an altruistic and omniscient voter do to avoid the charge of 'Dictatorial procedure' under an ideal voting system? Should he abstain from voting? But then 'informational inclusiveness' and 'democratic commitment' would go out of the window! We can't exclude a guy from voting because his vote is virtuous and well-informed. We have to let him vote even if he is stupid and vicious because that's 'informational inclusiveness'. Similarly 'democratic commitment' means feeling you have a duty to vote- even if you are smarter and more altruistic than others. 

Now, it may be, that Arrow's result has some occult, culturally specific, meaning which has to do with the refugee Ashkenazi Anarchist tradition- perhaps Arrow was mathematicizing Rudolf Rocker's (who was not himself Jewish) 'Nationalism & Culture' as an argument against any sort of 'Organicist' Bergsonian  SWF- and maybe, in line with some hints from Aumann, this has deep roots in Sanhedrin judicial hermeneutics such that even the 'bat kol'- the voice from Heaven revealing Divine Truth- must be excluded from a particular Social process of Deliberation. 

Still, we must admit, Hindu India has no similar tradition. If Sen was enraptured by Arrow's theorem, it was because he was too stupid to understand or too dishonest to acknowledge what is universally meant by the word 'Dictator', not because there existed some deep aporia in the Bengali collective psyche, or some shibboleth in its cultural heritage, or some repeated trauma in its political history, analogous to a certain strain in Ashkenazi Anarchism in the troublous first half of the Century.

True, both the antagonomic or ontologically dysphoric, perpetually kvetching, Yiddish Maven and the endlessly verbose, pointlessly argumentative, Bengali Babu were considered a little too big for their boots but, the fact is, times have changed. The Jews have done very very well politically and economically, and, truth be told, transformed the Sciences and the Arts. By contrast, Bengal has stagnated, it has gone backwards. Sen's Presidency College, for purely political reasons, has been in a state of continuous decline longer than I've been alive.

Why?

Bengali public discourse has gotten stupider and stupider, less and less alethic, more and more gestural, yet, because it has never bottomed out as a scurrilous Socioproctology but rather kept up a shabby genteel pretence of rationality and a veneer of Western scholarship, it retains a certain meretricious fungibility.

Thus, Sen could still have helped turn things round a little after he got his Nobel.

He chose to go in the other direction.
Every Bengali knows that Bangladesh was a democracy in 1974.
1.5 million died in a terrible famine.
In 1979 and 1984, Bangladesh was more of a dictatorship. Yet famine was averted.
This didn't stop Sen from idiotically bleating 'Famine can't happen in a Democracy'.
Why?
Aren't Bengalis human beings?
If they elect a Government in free and fair elections- why can't they be called a Democratic people?

Sen and Nussbaum's contribution to 'Deliberative Democracy' is the tolmema of telling stupid lies.

This does not mean all academics are worthless or that they should be excluded from any forum where grown-ups talk. Since discourse- public or otherwise- has no means to rule out a priori the possibility that it mightn't be utterly worthless, Arrowvian Dictators, incarnating a Bergsonian SWF, we may always have with us. However, they can't silence Sen-tentious drivel. So such Arrowvian Dictators are useless.

True, if you are really interested in the informational foundations of Economic or Political mechanisms, Arrow's theorem does open doors. It helps you to see the homology between preference revelation problems, agenda control problems, concurrency problems, problems of too much or too little preference diversity, problems of 'dynamic turbulence', hysteresis and ergodicity, Signalling, Coordination and Evolutionary Game Theoretic problems, problems relating to computational complexity classes- all sorts of problems become mutually illuminating. However these problems motivate research programs which increase 'efficiency' in the use of resources. They yield 'value free' objective agreements of a type that motivate the notion of a Social Welfare Function. They aren't a pure waste of time. Thus, they are 'Dictatorial' in an Arrowvian sense, more particularly as extended by Sen. But the corollary is- Democratic 'inclusiveness'  requires we shun such work. Better tell stupid lies instead.

Now to dispose of Sen's proof of Arrow's theorem.

 Adopt a convention such that any Arrowvian Dictator is deemed to have reversed his preferences for the purpose of aggregation. (Alternatively, allow the SWF to be non-deterministic while preserving 'anonymity') Then everything will be hunky dory. 
Proof of the General Possibility Theorem: By the Pareto Principle the set of all individuals is decisive. By the Contraction of Decisive Sets, some proper subset of all individuals must also be decisive. Take that smaller decisive set, but some proper subset of that smaller set must also be decisive. And so on. Since the set of individuals is finite, we shall arrive, sooner or later, at one individual who is decisive. But that violates the Non-dictatorship condition. Hence the impossibility. 

If everyone agrees on something, our Dictator (who knows and wants what everybody will later say was the best Collective decision but who is deemed to reverse his preference) will be the single vote against it. The Pareto Principle has no purchase. 'Contracting the decisive Set' is fruitless. There is no impossibility result because our omniscient and benevolent Sage is deemed to have reversed his preferences. Thus he doesn't fit the criterion for an Arrowvian dictator.

Stuff like this is puerile but then Professors are paid to prolong neoteny.

Economics, at least in India, faced a Credentialist crisis.

Too many graduates chasing too few bureaucratic berths.

Lectures on this type of shite served a warehousing function.

                                                                          

It seems obvious, now, that Sen's contributions to Econ. were either senseless or self-defeating. Still, from a narrowly Academic perspective, since Arrow himself went through Sen's 1970 'Collective Choice & Social Welfare', it is a canonical work. 

Kaushik Basu remarks that the Delhi School of Economics (this was in the economically stagnant and deeply disillusioning Sixties) had become a centre for Social Choice theory- or rather for such cowardly Careerism as chose to instrumentalize that mendacious availability cascade so as to shirk all Social Responsibility or Patriotic Duty and high tail it for Greener Pastures- and that he himself, as a graduate student at the LSE was asked by Prof. Morishima whether he intended to specialise in 'India's subject'- i.e the type of Econ which kept Indians malnourished while Japan rose and rose.

By the early Eighties, Social Choice- always useless- was clearly dead and so Basu and his ilk flourished in some equally arcane but less obviously inutile field.

Meanwhile Sen's own approach- his version of 'public discourse'-  was increasingly seen to be part of the problem because it made policy space multi-dimensional and thus gave salience to 'agenda control' as predicted by the McKelvey Chaos theorem. Put bluntly, this meant that playing the 'Equity' card was not proof of higher Ethical standing but just part of a corrupt rent-seeking racket or a bureaucratic buck passing strategy. Hurwicz's Mechanism Design, however, could continue to burgeon but Philosophy's intrusion into the Economist's domain merely added noise to signal. Sen himself was seen as a well meaning but ineffectual Mother Teresa- a figure to be venerated not emulated. Pakistan's Dr. Ruth Pfau- a trained Doctor specialising in leprosy- on the other hand, is a nun whose medical work is valuable in itself. Nobody would compare Sen to Dr. Pfau. But then Pfau isn't eligible for a bogus Nobel.

Why did Sen, a patriotic Indian who felt hurt by the suffering of the poor, end up championing failed policies and telling stupid lies? He wasn't really a Communist- indeed, he appears to be a Classical Economist living down a Benthamite predisposition. Why could he not 'speak truth to power'?

Perhaps Sen- as an undergraduate at Presidency didn't understand the Tarskian background to Arrow's theorem when he first chanced upon it. It cast a glamour upon him because he wasn't up to speed- few were, back then- on mathematical logic. Essentially, Arrow was doing something like Kripke (1975) who showed that a formal Language can contain its own Truth Predicate but in a manner that doesn't defeat Tarski but rather illuminates his result. Similarly, Arrow's reckless disregard for the truth in using phrases like 'Non-Dictatorship' or 'Social Welfare Function' is what gave his theorem its seemingly magical property. The Tarskian truth remains that there may be some non-deterministic, ineffable, procedure outside the Language- it may be in its meta-language- which could incarnate as an Oracle function within it- but we couldn't prove, for any given case, this was so. Thus Arrow's Non-Dictatorship might be like a restriction on a non deterministic Turing machine or oracle within the set of preference profiles and thus may be of continuing interest, though this is not something the extant literature has concerned itself with.

The blog 'a fine theorem' has a well researched article on Arrow from which I quote- 

'The usual story is that Arrow’s work on social choice came out of his visit to RAND in 1948. But this misstates the intellectual history: Arrow’s actual encouragement comes from his engagement with a new form of mathematics, the expansions of formal logic beginning with people like Peirce and Boole. While a high school student, Arrow read Bertrand Russell’s text on mathematical logic, and was enthused with the way that set theory permitted logic to go well beyond the syllogisms of the Greeks. What a powerful tool for the generation of knowledge! His Senior year at CCNY, Arrow took the advanced course on relational logic taught by Alfred Tarski, where the eminent philosopher took pains to reintroduce the ideas of Charles Sanders Peirce, the greatest yet most neglected American philosopher. The idea of relations are familiar to economists: give some links between a set (i.e, xRy and yRz) and some properties to the relation (i.e., it is well-ordered), and you can then perform logical operations on the relation to derive further properties.'

... A great theorem due to the Polish mathematician Szpilran, and I believe popularized among economists by Blackwell, says that if you have a quasiorder R that is transitive, then there exists an order R’ which completes it. In simple terms, if you can rank some pairs, and the pairs you do rank do not have any intransitivity, then you can generate a complete rankings of all pairs which respects the original incomplete ordering. Since individuals have transitive preferences, Pareto ranks are transitive, and hence we know there exist social welfare functions which “extend” Pareto.

The Szpilrajn extension theorem, which Blackwell brought to Arrow's attention and which, perhaps, motivated the latter's admission that he hadn't really killed off the Bergson SWF, depends on the 'Axiom of Choice' or equivalently 'Zorn's lemma' or 'the well-ordering theorem'. Even if we have no philosophical objection to this (i.e. we don't mind 'Banach-Tarski type weirdness or the manner in which any deterministic partial order is magically extended, perhaps by some non deterministic process, into a well-ordered set or continuous utility function) it is still the case that the sort of problems which it is useful for Economist's to work on- like the 'reverse game theory' that is mechanism or auction design- fall within the ambit of Friedman's 'Reverse Mathematics' project. Wikipedia says this approach 'starts with a framework language and a base theory—a core axiom system—that is too weak to prove most of the theorems one might be interested in, but still powerful enough to develop the definitions necessary to state these theorems. ...

'For each theorem that can be stated in the base system but is not provable in the base system, the goal is to determine the particular axiom system (stronger than the base system) that is necessary to prove that theorem'

Natural language discussion- e.g. the Socratic dialogues- proceeds in this manner. Embedding Social Choice in a 'Reverse Mathematics' Research project means there is no discontinuity between 'Philosophy' and 'Economics'. Policy space doesn't become multi-dimensional. There is no problem with Agenda Control.

Similarly, in Linguistics, the Chomskian notion that an 'i-language' exists- i.e the opinions of educated native speakers re. correct usage can be collected and systematised so an 'ideal' 'intensional' language is established as the proper object of study such that something like 'ECP' violation becomes as serious a scandal as CPT violation in Physics- this notion isn't really a step forward. It is a chimera, a mirage. It hasn't raised Language to the level of Physics. Rather it has made Syntax independent of Semantics. An i-language may exist, but the condition for its existence is that it is entirely meaningless.

Sen was a hardworking and smart guy. But he was greatly conscious of India's inferiority. His work on famines was worthless and he lied about it- but then starving people aren't important- that's why, according to him, some Bengalis ate 5 times as much rice during the Famine as they did before thus callously condemning other Bengalis to starve.

 Ken Arrow, however, was important- he was a top Professor related to other top Professors. Sen didn't distort Arrow. He was not intellectually dishonest. He saw that the Arrowvian program for Welfare Economics was going nowhere. It was dead in the water even if no preference-revelation problems arose. But it was still 'Western' and 'Democratic'. 

Sen's solution was worse than the disease. He chips away at the Pareto condition- the one thing everybody can agree on- and brings back 'value judgements' without resurrecting Samuelson's ethical program- this is Philosophy in its most bogus form, i.e. this is 'agenda-control' based rent-seeking sophistry- and does not change course though very much in the loop re. McKelvey & Schofield & Ostrogorski & Anscomb & Saari & Chichilnisky et al.

I am not saying Sen did anything wrong. He was an academic and that's what academics do- which is why we consider them drudges and donkeys. It wasn't his fault, his chosen field had turned moribund. Everyone assumed Sen had found himself another niche- something to do with saying 'guys, lets stop being dicks and just help poor and starving people already'- or that he was actually a Philosopher or maybe that he knew about ancient Indian thought.

But that was precisely the problem. The Indians too- including people like me- thought he must be capable of saying sensible stuff. He wasn't. He talked worthless self-regarding shite and made truly horrible policy prescriptions. His career as Chancellor of Nalanda University revealed him to be on a par with the most useless and corrupt of our own homegrown academic thugs. True, he ensured that the PM's daughter's friends got very well paid sinecures. That was right and proper and in keeping with Indian best practice. But, when a new PM came in, those ladies couldn't have their contracts extended in violation of the Charter because they had failed to get themselves powerful backers while the going was good.
Sen thinks 'autonomy' means 'keep the ex-PM's daughter's chums in office though it is illegal to do so and they have failed to secure political backing' and that such 'autonomy' turns a University- even one located in rural Bihar- into an international powerhouse. This isn't the case. Sen failed to get autonomy when it would have benefited his proteges. Why harp on the subject now that the other party has got its own man in as Chancellor?  

Things didn't have to go down this way. Sen could have embraced evolutionary game theory, like Binmore, and ended up showing the Govt. of India how to raise billions from Spectrum auctions. At the very least, he could have uttered 'truth to power' about the failures of the Public Education & Health System. But, he was afraid of the Left and chose, instead, to talk utter nonsense. He was quite close to the previous administration. Yet he says that his old colleague, Manmohan Singh, tried to turn India into a global economic power with a sick and uneducated workforce. Sen doesn't explain why Manmohan Singh was so cruel and stupid. No doubt, Sen thought he was criticising the new PM- Narendra Modi. But Modi isn't a friend of Sen's. Sen doesn't know what Modi is or is not trying to do. He did know what Singh was trying to do. Thus his stricture can only apply to Singh not Modi.

Sen, like Chomsky, has turned into a fake news guy because of intellectual grandiosity of a technical kind. He chose to take as his subject a Szpilrajn extended set which assumed the axiom of choice but which failed to account for the possibility this introduced- viz. Non Dictatorship will be violated by a non-deterministic Oracle (with a particular 'maximal' property) which must necessarily exist, though, realistically, it may be inaccessible for in a much higher complexity class. It is precisely the informational foundation of the subject which this grandiosity has destroyed in advance.

Chomsky did something similar to defend the question begging notion of an 'i-language'.  In other words, these two famous atheists first turned their subject into something God-like in its set theoretic properties and then became reconciled to saying it was meaningless save in some special sense known only to themselves and thus still part of 'Public reasoning'.

By contrast, 'Reverse Math', doing useful things with more parsimonious axioms is a good way forward which meshes well with what increased computing power and 'Big Data' allows smart people to do. But then Evolution itself takes this humble, regret minimising, route. No doubt, the fitness landscape is multi-dimensional but there is a workaround in terms of canalisation and capacitance diversity.

Something similar saves Public Discourse from Manichaean stasis or Corrupt 'Agenda Control' or buck passing concurrency deadlock. Why? Because people move on with their lives. Publicity Hungry Pundits can ignore how people vote but they can't ignore falling book sales. They have to jump on a Fake News bandwagon and advertise their meretriciousness more nakedly than every before.

A few hours after Ken Arrow's death was announced, this is Sen talking up the re-issue of his old book-

Sen begins by pretending that his 1970 book was concerned with what was actually happening in 1970. It wasn't. It was wholly abstract. It might have been a prediction of the sort of political processes which might obtain once 'the State had withered away' and Socialism had been established. It had no connection at all to American or British or Indian politics.

Public reasoning can't be Academic reasoning if the latter is based on an intensional language or relies crucially on things like Szpilrayn's theorem and therefore the axiom of choice. Why? Public reasoning must be in a natural language whose acceptations are common knowledge. Even if the public is super smart, its metaphysics must still be parsimonious and its semantics extensional. Otherwise well formed sentences in its language will be verifiably meaningless save adventiously or by means of an Oracle.

Trump may well have been wrong on the state of the US economy just as Kennedy was wrong about the 'missile gap'. So what? That's not why he was elected. No Trump voter is now saying 'whoops. I thought unemployment was rising so I voted for a guy with strange hair and an orange tan because...urm, that's what smart people do, right?'

Why does Sen assume that rational people will vote for an elderly property developer who has never held any sort of Govt. job or political office in his life just because they think that Unemployment is rising?

Is Sen a misogynist? Does he think that a woman in the White House would be incapable of reducing Unemployment despite being a Democrat? Even if Sen is a misogynist, why does he assume that the American voter shares his view?

Sen can't reason- at least in public- can he state verifiable facts? Asked about Modi's demonetisation, he says-

The Govt. gains seigniorage through demonetisation. It is a tax. It yields a very large dividend- one sufficient to implement a 'Basic Income' type cash-transfer which, by the second fundamental theorem of Welfare Econ, is allocatively efficient and, perhaps, India's only hope of of implementing a Social Minimum. Poor Indians are cash poor. Even Sen must know this. This isn't a regressive tax, though no doubt poor implementation may make it so for some. Notice, Sen isn't focusing on poor implementation. He is saying the idea is senseless in itself.

Why is Sen lying? Why is he saying it can't yield a dividend? Does he mean that the monetary shock will be so severe that tax revenue will fall? He knows that won't happen. So he isn't saying that. He's just lying is all.

Perhaps you think I'm being too hard on a senile man. Maybe he doesn't realise that '86 percent' of the monetary base isn't really being destroyed. But, this isn't actually the case is it?  His own remarks show that he knows that those who came by their cash honestly can exchange old notes for new ones. Those who didn't will take a hit. 

Longer term, this will tip Indians to move towards mobile banking. Vested interests- of a sort ordinary Indians come across in their day to day life- want briefcases of cash. They will have to find a new modus operandi. The State has an opportunity, which may be frittered away, to change the fiscal equation. I don't know the outcome. Nor does Sen. But Sen is willing to tell lies about it.

Why?

He's a shill for a Academic Ponzi scheme repackaging a worthless book he wrote in 1970.
Okay. Fair enough. That's Globalisation for you- just Capitalism at work- so what?

Well, actually there's a tragic twist to this tale

Arrow, as a young man, made his name by using what had become a highly emotive word- viz. 'Dictator' -in a dishonest way. He was trying to get the ethics out of Welfare Econ by unethical means while pointing to a type of Maths which in time would become genuinely important. Suppose he'd used the word 'Paedophile' instead. Then, Sen and other young Bengalis- who for historical reasons thrilled to the word 'Dictator' but, quite rightly, experienced no similar frisson at the term 'kiddy fiddler'- would not have written so much worthless nonsense nor would they now be habituated to telling such stupid lies. Instead, genuine Philosophers- motivated by Platonic dialogues like the Lysis and the Phaedrus- which are about fucking rich kids in the ass- would have taken up Arrow's theorem and that would be all right because they'd now be in jail having their heads kicked in, all of which only goes to prove true Democracy can guard us against Famine. Or if not Famine, at least it can do the washing up.

Just checked.
It hasn't.
Sad.