## Addendum on Existential Risk and Existential Uncertainty

### 23 April 2013

Tuesday

Earth and the moon in one frame as seen from the Galileo spacecraft 6.2 million kilometers away. (from Picture of Earth from Space by Fraser Cain)

In my post Existential Risk and Existential Uncertainty I cited Frank Knight’s distinction between risk and certainty and attempted to apply this to the idea of existential risk. I suggested that discussions of existential risk ought to distinguish between existential risk (sensu stricto) and existential uncertainty.

In Knight’s now-classic work Risk, Uncertainty, and Profit, Frank Knight actually made a threefold distinction in the kinds of probabilities that face the entrepreneur:

1. A priori probability. Absolutely homogeneous classification of instances completely identical except for really indeterminate factors. This judgment of probability is on the same logical plane as the propositions of mathematics (which also may be viewed, and are viewed by the writer, as “ultimately” inductions from experience).

2. Statistical probability. Empirical evaluation of the frequency of association between predicates, not analyzable into varying combinations of equally probable alternatives. It must be emphasized that any high degree of confidence that the proportions found in the past will hold in the future is still based on an a priori judgment of indeterminateness. Two complications are to be kept separate: first, the impossibility of eliminating all factors not really indeterminate; and, second, the impossibility of enumerating the equally probable alternatives involved and determining their mode of combination so as to evaluate the probability by a priori calculation. The main distinguishing characteristic of this type is that it rests on an empirical classification of instances.

3. Estimates. The distinction here is that there is no valid basis of any kind for classifying instances. This form of probability is involved in the greatest logical difficulties of all, and no very satisfactory discussion of it can be given, but its distinction from the other types must be emphasized and some of its complicated relations indicated.

Frank Knight, Risk, Uncertainty, and Profit, Chap. VII

At the end of the chapter Knight finally made his point fully explicit:

It is this third type of probability or uncertainty which has been neglected in economic theory, and which we propose to put in its rightful place. As we have repeatedly pointed out, an uncertainty which can by any method be reduced to an objective, quantitatively determinate probability, can be reduced to complete certainty by grouping cases. The business world has evolved several organization devices for effectuating this consolidation, with the result that when the technique of business organization is fairly developed, measurable uncertainties do not introduce into business any uncertainty whatever. Later in our study we shall glance hurriedly at some of these organization expedients, which are the only economic effect of uncertainty in the probability sense; but the present and more important task is to follow out the consequences of that higher form of uncertainty not susceptible to measurement and hence to elimination. It is this true uncertainty which by preventing the theoretically perfect outworking of the tendencies of competition gives the characteristic form of “enterprise” to economic organization as a whole and accounts for the peculiar income of the entrepreneur.

Frank Knight, Risk, Uncertainty, and Profit, Chap. VII

Knight’s distinction between risk and uncertainty — between probabilities that can be calculated, managed, and insured against and probabilities that cannot be calculated and therefore cannot be managed or insured against — continues to be taught in business and economics today. (It is a distinction closely parallel to Rumsfeld’s distinction between known unknowns and unknown unknowns, though worked out in considerably greater detail and sophistication.) Knight’s slightly more subtle threefold distinction among probabilities might be characterized as a tripartite distinction between certainty, risk, and uncertainty.

Knight acknowledges, in his account of statistical probability, i.e., risk, that there are at least two complications:

1. that of eliminating all truly indeterminate features, and…

2. the impossibility of enumerating the equally probable alternatives involved

Knight’s hedged account of risk obliquely acknowledges the gray area that lies between risk and uncertainty — a gray area that can be enlarged in favor of risk as our knowledge improves, or which can be enlarged in favor of uncertainty as additional complicating favors enter into our calculation of risk and render our knowledge less effective and our uncertainty all the greater. That is to say, the line between risk and uncertainty is unclear, and it can move, which makes it doubly ambiguous.

These hedges are important qualifications to make, because we all know from real-life experience that additional complicating factors always enter into actual risks. We may try to insure ourselves, and therefore to secure our interests against risk, but fine print in the insurance contract may deny us a settlement, or we may have forgotten to pay our premiums, or a thousand other things might go wrong between our careful planning and the actual events of life that so often preempt our planning and force us to deal with the unexpected with insufficient preparation. As Bobby Burns put it, “The best laid schemes o’ Mice an’ Men, Gang aft agley, An’ lea’e us nought but grief an’ pain, For promis’d joy!”

Such consideration span the entire universe from field mice to galaxies. A coldly rational assessment of risk can be made, and resources can be expended to mitigate risk to the extent calculated, but not only are the limits to our knowledge, but we don’t know where the limits to our knowledge lie. Indeterminate features can creep into our calculation and equally probable alternatives could be in play without our even being aware of the fact.

Some events that pose existential risks or global catastrophic risks can be predicted with a high degree of accuracy, and some cannot. Even about those risks that seem predictable to a high degree of accuracy — say, the life of the sun, which can be predicted on the basis of our knowledge of cosmology, and which thereby would seem to give us some knowledge of how long a time we have on earth to lay our schemes — admit of indeterminate elements and equally probably scenarios. The end of the earth seems a long way off, if the earth lasts almost as long as the sun, and putting our existential risk far in the future seems to diminish the threat.

There is a famous quote from Frank Ramsey (who died tragically young in a mountain climbing accident, as might happen to anyone, anytime) that is relevant here, both economically and philosophically:

My picture of the world is drawn in perspective and not like a model to scale. The foreground is occupied by human beings and the stars are all as small as three-penny bits. I don’t really believe in astronomy, except as a complicated description of part of the course of human and possibly animal sensation. I apply my perspective not merely to space but also to time. In time the world will cool and everything will die; but that is a long time off still and its present value at compound discount is almost nothing.

From a paper read to the Apostles, a Cambridge discussion society (1925). In ‘The Foundations of Mathematics’ (1925), collected in Frank Plumpton Ramsey and D. H. Mellor (ed.), Philosophical Papers (1990), Epilogue, 249

Despite Ramsey having referred (in another context) to the “Bolshevik menace” of Brouwer and Weyl, it has been said that Ramsey became a constructivist not long before he died. This conversion should not surprise us, given Ramsey’s Protagorean profession in his passage.

Protagoras famously said that Man is the measure of all things, of those things that are, that they are, and of those things that are not, that they are not. (πάντων χρημάτων μέτρον ἐστὶν ἄνθρωπος, τῶν μὲν ὄντων ὡς ἔστιν, τῶν δὲ οὐκ ὄντων ὡς οὐκ ἔστιν.) Protagoras may be counted as the earliest of proto-constructivists, of which company Kant and Poincaré may be considered the most famous.

In the passage quoted above, Ramsey is essentially saying in a modern idiom that man is the measure of all things, even of time and space — that man is the measure of the farthest reaches of time and space, and in so far as these distant prospects of human experience are inaccessible, they are irrelevant. Ramsey is important in his respect because of his consciously chosen anthropocentrism. In a post-Copernican age, this is significant. We are all, of course, familiar with the advocates of the anthropic cosmological principle, and their implicit anthropocentrism, but Ramsey gives us a slightly different perspective on anthropocentrism. Ramsey essentially brings constructivism to our moral life, and in so doing suggests that the moral imperatives posed by existential risk can be safely ignored for the time being.

What Ramsey is saying here is that we can make a definite calculation of the lives of the stars — and also the expected life of our sun — and that we can insure against this risk, but that the risk lies so far in the future that its present value is practically nil. In other words, the eventual burning out of the sun is a risk and not an uncertainty. On the contrary, it is not an uncertainty at all, but a certainty. Just as the finite amount of oil on Earth must eventually come to an end, the finite sun must also come to an end.

What our growing knowledge of cosmology is teaching us is that we are not isolated from the wider universe. Events on a cosmic scale have influenced the development of life on earth, and may well be responsible for our development as a species. If the earth had not been hit by an asteroid or comet about 65 million years ago, mammals may never have developed as they did, and we would not exist. And if our solar system did not bob up and down through the galactic plane of the Milky Way, resulting in geophysical rhythms from the the gravitational interaction with the rest of the galaxy, a distant asteroid of comet might not have been dislodged from its stable orbit and sent careening toward earth.

Given our connection with the wider universe, and our vulnerability to its convulsions, what we know about our local risks (which is not nearly enough, as recent unpredicted episodes have shown us) is not enough to make a calculation of our vulnerability. What appears superficially to be a calculable risk has uncertainty injected back into it by the cosmological context in which all astronomical events take place.

If the death of the sun were the only existential risk against which we needed to insure ourselves, we would not need to be in any hurry about existential risk mitigation, because we would have literally millions of years to build a spacefaring civilization and thus to insure ourselves against that predictable catastrophe. But in our violent universe (as Nigel Calder called it) scarcely a million years goes by without some cosmic catastrophe occurring, and we don’t know when then next one will arrive.

Carl Sagan rightly pointed out that an event that is unlikely to happen in a hundred years may be inevitable in a hundred millions years:

The Earth is a lovely and more or less placid place. Things change, but slowly. We can lead a full life and never personally encounter a natural disaster more violent than a storm. And so we become complacent, relaxed, unconcerned. But in the history of Nature, the record is clear. Worlds have been devastated. Even we humans have achieved the dubious technical distinction of being able to make our own disasters, both intentional and inadvertent. On the landscapes of other planets where the records of the past have been preserved, there is abundant evidence of major catastrophes. It is all a matter of time scale. An event that would be unthinkable in a hundred years may be inevitable in a hundred million.

Carl Sagan, Cosmos, Chapter IV, “Heaven and Hell”

Perhaps in one of his most quoted lines, Sagan said that we are “star stuff,” and certainly this is true. However, the corollary of this inspiring thought is that our star stuff is subject to the natural forces that shape the destinies of stars, and in shaping the destiny of stars, shape the destiny of men who live on planets orbiting stars.

Understanding ourselves as “star stuff” entails understanding ourselves as living in a dangerous universe replete with devouring black holes, gamma ray bursts, supernovae, and other cataclysms almost beyond the capacity of human beings to conceive.

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## Addendum on Automation and the Human Future

### 17 March 2013

Sunday

Since posting Automation and the Human Future a few days ago, a reader has directed by attention to Technological Unemployment Amidst Stagnation at All Systems Need A Little Disorder by Ashwin Parameswaran. I have previously mentioned Ashwin Parameswaran’s blog, Macroeconomic Resilience, in my post Self-Dissimilarity.

While my last post credited the fear of technogenic unemployment primarily to recession-induced pessimism, Parameswaran takes technogenic unemployment very seriously, and anticipates “Transitioning To The Near-Automated Economy,” even considering the changes that must come about in education as this transition is made. What Parameswaran writes is so wonderfully sane and reasonable, and I agree with so much of it (indeed, it warmed my heart to see him refer to our economy today as “neo-feudal” as this is a point that I have made many times), that I hesitate to differ with him, and I don’t need to differ with Parameswaran too much if we adjust our expectations to la longue durée and make it clear that we are not talking about what is going to happen within 25 years or so.

I am certainly not beyond speculating on the possibility of very different employement structures. In my post Counterfactual Conditionals of the Industrial Revolution, I suggested the possibility of an industrial revolution of a different sort — an industrial revolution resulting in a society in which the supply and the demand for labor were not nearly so close to being in equilibrium as they are today. For despite the problems of unemployment that plague advanced industrialized societies, the astonishing thing about it is not that there is unemployment, but rather that supply and demand of labor are so nearly identical. In a different kind of society, a different kind of industrial civilization, this approximation of employment demand to employment supply might not obtain.

As long as we take a sufficiently long time-horizon I am willing to agree that we will be eventually transitioning to a near-automated economy. In a comment made on the Los Angeles Times article L.A. 2013 — about an article from 03 April 1988 (from the Los Angeles Times Magazine), seeking to predict a quarter century into the future to 2013, Yves Rubin wrote…

“In general, such futuristic articles should multiply time spans by at least 10. Downtown Los Angeles “may” look like in this article’s cover photo in 250 years!”

I largely agree with this. In 25 years we see little change, but in 250 years we are likely to see significant change. Think back to the world 250 years before the present — the world of 1763, when the Treaty of Paris was signed, ending the Seven Years’ War — and if we compare that world, without electricity, without the internal combustion engine, before the industrial revolution, and before the United States existed, with our world today, we can see how radical the changes to the familiar world can be in a future an order of magnitude beyond the modest 25 years of the 1988 article about LA.

I am willing to admit without hesitation that, 250 years from now, we may well have realized a near-automated economy, and that this automation of the economy will have truly profound and far-reaching socioeconomic consequences. However, the original problem then becomes a different problem, because so many other things, unanticipated and unprecedented things, have changed in the intervening years that the problem of labor and employment is likely to look completely different at this future date. If the near-automated economy becomes a reality in 250 years — a scenario that I will not dispute — I don’t think that this will be much of a problem, because we will need machines producing the goods we need to expand the human presence in the Milky Way. Seven billion people is a lot on the surface of the Earth — and there will be even more people by that time — but when spread out in the galaxy, seven billion human beings isn’t even enough to scratch the surface, as it were.

The transition to a near-automated economy (contemplated in isolation from parallel synchronous changes) would require adjustments so radical that it would be an open question, once these changes were in place and the near-automated economy is up and running, whether we would still be living in the same old industrial-technological civilization we have come to know and love, or whether this historical discontinuity was sufficient to cause a rupture that results in the constitution an an entirely new civilization — perhaps even constituting a preemption event that ends industrial-technological civilization by replacing it with whatever comes next. Over time, these adjustments will happen more or less naturally, but contemplated in one fell swoop the necessary adjustments seem incomprehensibly radical.

In the article Real Robot Talk in The Economist that I quoted in my last post, Automation and the Human Future, the author wrote that, “modern economies continue to use wages as the primary means by which purchasing power is distributed.” What mechanism other than wages can be employed as a means for the distribution of purchasing power? How could goods and services be allocated within an economy without the quantification that wages effect? (The problem is similar to that of allocating capital and resources within a socialist economy: how is capital to be allocated to enterprises without a pricing mechanism?)

This is another example of thinking in conventional terms about a time in the future when conventional assumptions will no longer hold. By the time the automated economy will seriously alter social relationships, so many other things will have happened, and will be happening, that terms like “labor” and “capital” and “goods” and “services” will have come to take on such different meanings that to formulate things in the old way would be nothing but an anachronism.

It is to be expected that measures will be taken in the attempt to preserve the present structure of civilization as long as possible (and in so doing to preserve the familiar meanings of familiar terms), and some of these measures may seem quite drastic in their attempts to preserve certain institutions. For example, we may see mass mobility of labor across nation-state boundaries allowing technogenically superfluous labor to seek opportunities for work in regions of the world not yet transformed by the technologies of automated production. As entrenched as the nation-state is in our contemporary thought, it is not as entrenched as our idea of civilization, and we would sooner compromise the nation-state and the international order based upon the nation-state than we would allow our civilization to lapse.

Yet, in the fullness of time, not only will our nation-states lapse, but our distinctive form of civilization will lapse also, and it will be replaced by another form of civilization, as yet unknown to us.

It is one of the distinctive features of civilization that the problems intrinsic to a given form of civilization emerge simultaneously with the civilization and disappear with the disappearance of that civilization; that is to say, for the most past, the problems of a particular form of civilization are not passed along to new forms of civilization, which have their own problems. I take this to be one of the most fascinating features of civilization, and I don’t think that it receives sufficient attention in the study of civilization. What it implies is that, like an artist’s work, a civilization’s problems are never resolved, only abandoned.

The problem of royal legitimacy, for example, scarcely exists today, and in so far as it exists at all it only exists as a holdover from an earlier form of civilization that no longer exists, as is the case with the constitutional monarchies of Europe. But the intense debates over the divine right of kings simply don’t exist any more. The problem was never “solved” but was intrinsic to the form of civilization in which royal authority was central, and once royal authority was no longer the central organizing principle of civilization, the “problem” of royal authority, its source and its legitimacy, simply disappears.

Of course, one of the ways in which one kind of civilization succeeds another is through a radical innovation that “solves” (in a sense) the problems of the earlier civilization, but in so “solving” the problem another kind of civilization is created, and so the solution does not obtain within the previous civilizational paradigm; it defines a new civilizational paradigm, within its own problems (to become manifest in the fullness of time) awaiting a solution that will initiate another civilizational paradigm.

Automated production issuing in maximized abundance and the demise of employment as we know it today would constitute a transition to a distinct form of civilization from the industrial-technological civilization that we know today, and the emergence of a future industrial-technological civilization in which maximized abundance becomes an established fact and human labor superfluous to the maximized abundance would also constitute a changed socioeconomic context that would interact will all other synchronous historical events transpiring in parallel and therefore in mutual relations of influence.

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## Automation and the Human Future

### 14 March 2013

Thursday

During the early years of the industrial revolution, people (including young children) worked the kind of hours in factories that they have been accustomed to working on farms during agrarian civilization. That meant a lot of 14 and 16 hour days. After the initial misery of the “factory system,” things got sorted out and the hours of the work day fell precipitously. Eventually, the work week fell to a standard 40 hours, though in the most productive economies in the world today many if not most people routinely put in overtime hours.

Futurists, however, instead of seeing this declining workweek in historical context as a one-time transition from one kind of social organization to another, forecast that the work week would go on shrinking, from 40 hours to 30 hours, from 30 hours to 20 hours, and eventually automation would make human labor unnecessary. Given this forecast, one of the great social problems that industrial civilization would have to face would be that of what everyone would do in a society of maximized abundance and scarce employment.

It was widely thought by “progressive” thinkers that Europe was on the cutting edge of this revolution in labor and employment, as many European countries statutorily limited the work week to a certain number of hours. In far more recent predictions it was suggested that the vast common market created by the European Union would come to dominate the world economy. (Up until the recent financial crisis, Parag Khanna was predicting ascendancy of Europe as a global force.) Yet European economies proved stagnant, and not a vibrant source of innovation and growth, whether economic or technological.

The optimistic futurism of the 1970s is especially easy to ridicule (though it is often no more wide of the mark than more recent futurist predictions), and I think that this is due to the fact that the early Space Age of the 1960s significantly raised hopes and expectations, when these hopes and expectations were not swiftly gratified with jetpacks, flying cars, and vacations to the moon, the whole enterprise of technological futurism fell into disrepute.

Many supposedly “failed” predictions of futurism — supposedly falsified by history like the political triumph of a given economic system and secularization — may yet come true but on a time scale that lies beyond the brief attention spans of the mass media. Given the fact that big ideas move very slowly through history, like the passage of large prey through the gut of a snake, and given the tendency of the mass media to build up the idea of the moment into a kind of hysteria, only to see interest in that idea collapse soon after, it is nearly inevitable that the same ideas will come up time and again as they continue their passage through contemporary history, going through periods of being considered prescient alternating with periods of being believed to have been “disproved” by history.

Recently the once-discredited futurist idea of widespread automation leading to maximized material abundance issuing in sharply increased and persistent unemployment has been making a significant comeback in the popular press. Let’s make a quick review of how the idea appeared in mid-twentieth century futurism.

In a book intended to be a non-hyped, non-flashy exercise in futurism, Stuart Chase made the case for automation and posed the problem of persistent unemployment for a mass society:

“Computers and automatic mechanism have already taken over a great deal of routine work, such as bank bookkeeping, and they are expected to take over a great deal more. Not only large plants and offices will be computerized, but also small organizations, as the hardware becomes less costly. What then will happen to people? …If people have no jobs, how can they buy the products made by the workers who remain? If, on the other hand, it is possible to subsidize the jobless as consumers, what happens to their nervous systems, self-confidence, and character? Most of us would rather be occupied than not… but in what form?”

Stuart Chase, The Most Probable World, 1968, Chapter 10, “Is man a working animal?,” p. 136

The idea of automation even plays a central role in Valerie Solanas’ S.C.U.M. Manifesto, where the benefits of automation are accepted uncritically:

“There is no human reason for money or for anyone to work more than two or three hours a week at the very most. All non-creative jobs (practically all jobs now being done) could have been automated long ago, and in a moneyless society everyone can have as much of the best of everything as she wants. But there are non-human, male reasons for wanting to maintain the money system…”

Others saw further and thought more critically. Only a year after Stuart Chase’s book, Victor C. Ferkiss had a much more grounded understanding of what technology would mean in the workplace, and his account gives a sense of technological dystopia à la Metropolis, in contradistinction to the wide-eyed technological utopianism that mostly prevailed when he wrote the following:

“Automation has seemingly done little to reduce the drudgery of work. Where the assembly line exists, it is still irksome… Where the old centralized rigid processes have been automated with machines taking over routine tasks, working conditions, especially psychological one, have not improved. Such evidence as exists indicates that the watchers of dials — the checkers and maintainers — are likely to be lonely, bored, and alienated, often feeling less the machine’s master than its servant. Dealing with computers can be as frustrating for the worker as for the client-consumer, with data on a print-out even more difficult to check and rectify than that in human accounts or reports.”

Victor C. Ferkiss, Technological Man: The Myth and the Reality, 1969 (Signet Mentor 1970), Chapter 6, “Technological Change and Economic Inertia,” pp. 122-123

Such quotes and observations could be multiplied at will; I took my quotes from books that I happened to have on hand, but, as I wrote above, it was a prominent feature in mid-twentieth century futurism to ask what would become of the working masses once automation deprived them of labor, and therefore — presumably for the privileged few writing about the problem — the content and meaning of working class lives.

Now the problem of job loss due to automation is being posed again, and almost in precisely the same terms, notwithstanding the computing and telecommunications revolution that has occurred in the meantime. I cannot help but speculate that these elite worries over restive, unemployed masses are almost entirely due to the stagnant if not depressed condition of the global economy since the financial crisis that started unrolling with the sub-prime mortgage debacle in the US, and subsequently moved on to other unemployment-inducing crises around the world.

An article in The Economist, Real robot talk (from 01 March 2013), revisits the theme of technologically-induced (we might even say technogenic) unemployment from automation and robotics. The article finishes with these wise observations:

“Technological progress sufficient to cause these kinds of dislocations should also generate overall economic gains large enough to make everyone better off. But just because everyone could be made better off by progress doesn’t mean that everyone will be made better off. There must be an institutional framework in place to ensure that the gains from growth are shared.”

However, the rest of the article is not nearly so enlightening. The Economist article offers three possible responses to technogenic unemployment:

1. more education for less skilled workers

2. protecting less skilled jobs through regulation

3. direct wealth transfers

I am struck by the utter lack of imagination in these three proposals. If this is all than an elite publication like The Economist has to offer, clearly we are in serious trouble. The whole idea of trying to educate everyone to the level that the elites believe themselves to have attained begs so many questions that it is difficult to know where to start. Therefore I will limit myself only to the comment that many if not most entrepreneurs are drop outs, and the highly educated work for the entrepreneurs who create companies, and so create jobs and opportunities and increase productivity. As for protecting low skilled jobs, this is perhaps the worst possible suggestion, since it would directly impact the increase in productivity that could potentially free those in wage-slave drudgery from their mechanizable tasks. And direct wealth transfers have been tried, almost always with disastrous results.

A similar recent article that is a sign of the times is The Rise of the Robots by Robert Skidelsky. (I won’t quote Skidelsky, since his website says, “Reprinting material from this Web site without written consent from Project Syndicate is a violation of international copyright law.”) A Manichean contrast between optimists and pessimists runs through Skidelsky’s piece, as though the parties to the argument had nothing on their side except temperamental inclinations.

This isn’t about optimists or pessimists, except in so far as present-day commentators are pessimistic because their banker and journalist friends are feeling the pinch, too. That’s what happens when a persistent recession takes a chunk out of contemporary economic history. When the present downturn has passed — it hasn’t passed yet, and by the time it’s over I suspect many will come to speak of a global “lost decade” — I predict that talk of technogenic unemployment will also pass until the next crisis.

In the longer term of industrial-technological civilization, abundance may yet become a problem, and meaningful work a privilege, but we are a very long way from this being the case. The industrial revolution is only now transforming Asia, and it has yet to transform Africa. The problem of global technogenic unemployment cannot be a persistent economic blight until the global economy entire has been technologically transformed by industrialization — incidentally, the same conditions that must obtain for the experimentum crucis of Marxism (another supposedly disconfirmed idea from history).

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## Existential Risk and Existential Uncertainty

### 6 March 2013

Wednesday

Frank Knight on risk and uncertainty

Early Chicago school economist Frank Knight was known for his work on risk, and especially for the distinction between risk and uncertainty, which is still taught in economics and business courses. Like Schumpeter, Knight was interested in the function of the entrepreneur in the modern commercial economy, and he employed his distinction between risk and uncertainty in order to illuminate the function of the entrepreneur.

Although it is easy to conflate risk and uncertainty, and to speak as though facing a risk were the same thing as facing uncertain or unknown circumstances, Knight doesn’t see it like this at all. A risk can be quantified and calculated, and because risks can be quantified and calculated, they can be controlled. This is the function of insurance: to quantify and price risk. If you have correctly factored risk into your calculation, it is no longer an uncertainty. You might not know the exact date or magnitude of losses, but you know statistically that there will be a certain number of losses of a certain magnitude. It is the job of actuaries to calculate this, and one buys insurance to control the risk to which one is exposed.

The ordinary business of life, and of business, according to Knight, involves risk management, but the unique function of the entrepreneur is to accept uncertainty that cannot be quantified, priced, or insured. The entrepreneur makes his profit not in spite of uncertainty, but because of uncertainty. No insurance can be bought for uncertainty, so that in taking on an uncertain situation the entrepreneur enters into a realm in which it is recognized that there are factors beyond control. If he is not destroyed financially by these uncontrollable factors, he may profit from them, and this profit is likely to exceed the profit made in ordinary business operations exposed to risk but not to uncertainty.

Here is how Knight formulated his distinction between risk and uncertainty:

To preserve the distinction which has been drawn in the last chapter between the measurable uncertainty and an unmeasurable one we may use the term “risk” to designate the former and the term “uncertainty” for the latter. The word “risk” is ordinarily used in a loose way to refer to any sort of uncertainty viewed from the standpoint of the unfavorable contingency and the term “uncertainty” similarly with reference to the favorable outcome; we speak of the “risk” of a loss, the “uncertainty” of a gain. But if our reasoning so far is at an correct, there is a fatal ambiguity in these terms which must be gotten rid of and the use of the term “risk” in connection with the measurable uncertainties or probabilities of insurance gives some justification for specializing the terms as just indicated. We can also employ the terms “objective” and “subjective” probability to designate the risk and uncertainty respectively, as these expressions are already in general use with a signification akin to that proposed.

Frank Knight, Risk, Uncertainty, and Profit, CHAPTER VIII, STRUCTURES AND METHODS FOR MEETING UNCERTAINTY

The practical difference between the two categories, risk and uncertainty, is that in the former the distribution of the outcome in a group of instances is known (either through calculation a priori or from statistics of past experience), while in the case of uncertainty this is not true, the reason being in general that it is impossible to form a group of instances, because the situation dealt with is in a high degree unique.

Frank Knight, Risk, Uncertainty, and Profit, CHAPTER VIII, STRUCTURES AND METHODS FOR MEETING UNCERTAINTY

The growth of knowledge and experience can transform uncertainty into risk if it contextualizes a formerly unique situation in such a way as to demonstrate that it is not unique but belongs to a group of instances. Of the tremendous gains made in the space sciences during the last forty years, during our selective space age stagnation, it could be said that the function of this considerable gain in knowledge has been to transform uncertainty into risk. But this goes only so far.

Even if the boundary between risk and uncertainty can be pushed outward by the growth of knowledge, the same growth of civilization that attends the growth of knowledge and technology means that the boundaries of civilization itself will also be pushed further out, with the result being that we are likely to always encounter further uncertainties even as old uncertainties are transformed by knowledge into risk.

The evolution of the existential risk concept

In many recent posts I have been discussing the idea of existential risk. These posts include, but are not limited to, Moral Imperatives Posed by Existential Risk, Research Questions on Existential Risk, and Six Theses on Existential Risk. The idea of existential risk is due to Nick Bostrom. (I first heard about this at the first 100YSS symposium in Orlando in 2011, when I was talking to Christian Weidemann.)

Nick Bostrom defined existential risk as follows:

Existential risk – One where an adverse outcome would either annihilate Earth-originating intelligent life or permanently and drastically curtail its potential.

An existential risk is one where humankind as a whole is imperiled. Existential disasters have major adverse consequences for the course of human civilization for all time to come.

“Existential Risks: Analyzing Human Extinction Scenarios and Related Hazards,” Nick Bostrom, Professor, Faculty of Philosophy, Oxford University, Published in the Journal of Evolution and Technology, Vol. 9, No. 1 (2002)

In his papers on existential risk and the book on Global Catastrophic Risks, Bostrom steadily expanded and refined the parameters of disasters that have (or would have) major adverse consequences for human beings and their civilization.

Table of six qualitative categories of risk from ‘Existential Risks: Analyzing Human Extinction Scenarios and Related Hazards’

The table from an early existential risk paper above divides qualitative risks into six categories. the table below from the book Global Catastrophic Risks includes twelve qualitative risk categories and implies another eight; the table further below from a more recent paper includes fifteen qualitative risk categories and implies another nine. From a philosophical point of view, these further distinctions represent in advance in clarity, contextualizing both existential risks and global catastrophic risks in a matrix of related horrors.

Table of qualitative risk categories from the book Global Catastrophic Risks.

The specific possible events that Bostrom describes range from the imperceptible loss of one hair to human extinction. Recently in Moral Imperatives Posed by Existential Risk I tried to point out how further distinctions can be made within the variety of human extinction scenarios, and that some distinct outcomes might be morally preferable over other outcomes. For example, even if human beings were to become extinct, we might want some of our legacy to remain to potentially be discovered by alien species visiting our solar system. Given the presence of space probes throughout our solar system, it seems highly likely that these would survive any human extinction scenario, so that we have left some kind of mark on the cosmos — a cosmic equivalent of “Kilroy was here.”

Qualitative risk categories, Figure 2 from ‘Existential Risk Prevention as Global Priority’ (2012) Nick Bostrom

Further distinction can be made, however, and the distinction that I would like to urge today is that of distinguishing existential risks from existential uncertainties.

The need to explicitly formulate existential uncertainty

Once the distinction is made between existential risks and existential uncertainties, we recognize that existential risks can be quantified and calculated. Ultimately, existential risks can also be insured. The industrial and financial infrastructure is not now in place to do this, although we can clearly see how to do this. And this much is obvious, because much of the discussion of existential risk focuses on potential mitigation efforts. Existential risk mitigation is insurance against extinction.

We can clearly understand that we can guard against the existential risks posed by massive asteroid impacts by a system of observation of objects in space likely to cross the path of the Earth, and building spacecraft that could deflect or otherwise render harmless such threatening asteroids. It was once thought that the appearance of comets or “new stars” (novae) in the sky heralded the death of kings of the end of empires. No longer. This is the perfect example of a former uncertainty that has been transformed into a risk by the growth of knowledge (or, at very least, is in the process of being transformed from an uncertainty into a risk).

We can also clearly see that we could back up the Earth’s biosphere about a truly catastrophic global disaster by transplanting Earth-originating life elsewhere. Far in the future we can even understand the risk of the sun swelling into a red giant and consuming the Earth in its fires — unless by that time we have moved the Earth to an orbit where it remains safe, or perhaps even transported it to another star. All of these are existential risks where “risk” is used sensu stricto.

There are a great many existential risks and global catastrophic risks that have been proposed. When it comes to geological events — like massive vulcanization — or cosmological events — the death of our sun — the sciences of geology and cosmology are likely to mature to the point where these risks are quantifiable, and if industrial-technological civilization continues its path of exponential development, we should also someday have the technology to adequately “insure” against these existential risks.

The vagaries of history and civilization

When it comes to scenarios that involve events and processes not of the variety that contemporary natural science can formulate, we are clearly pushing the envelope of existential risks and verging on existential uncertainties. Such scenarios would include those predicated upon the development of human history and civilization. For example, scenarios of wars of an order of magnitude that far exceed the magnitude of the global wars of the twentieth century are on the outer edges of risk and, as they become more speculative in their formulation, verge onto uncertainty. Similarly, scenarios that involve the intervention of alien species in human history and human civilization — alien invasion, alien enslavement, alien visitation, etc. — verge onto being existential uncertainties.

The anthropogenic existential risks that are of primary concern to Nick Bostrom, Martin Rees, and others — risks from artificial intelligence, machine consciousness, unintended consequences of advanced technologies, and the “gray goo” problem potentially posed by nanotechnology — are similarly problematic as risks, and many must be accounted as uncertainties. In regard to the anthropogenic dimension of many existential uncertainties I am reminded of a passage from Carl Sagan’s Cosmos:

“Biology is more like history than it is like physics. You have to know the past to understand the present. And you have to know it in exquisite detail. There is as yet no predictive theory of biology, just as there is not yet a predictive theory of history. The reasons are the same: both subjects are still too complicated for us. But we can know ourselves better by understanding other cases. The study of a single instance of extraterrestrial life, no matter how humble, will deprovincialize biology. For the first time, the biologists will know what other kinds of life are possible. When we say the search for life elsewhere is important, we are not guaranteeing that it will be easy to find – only that it is very much worth seeking.

Carl Sagan, Cosmos, CHAPTER II, One Voice in the Cosmic Fugue

This strikes me as one of the most powerful and important passages in Cosmos. When Sagan writes that, “[t]here is as yet no predictive theory of biology, just as there is not yet a predictive theory of history,” while leaving open the possibility of a future predictive science of biology and history — he wrote as yet — he squarely recognized that neither biology nor human history (much of which derives more or less directly from biology) can be predicted or quantified or measured in a scientific way. If we had a science of history, such as Marx thought we had discovered, then the potential disasters of human history could be quantified, and we could insure against them.

Well, we can insure against some eventualities of history, though certainly not against all. This is a point that Machiavelli makes:

It is not unknown to me how many men have had, and still have, the opinion that the affairs of the world are in such wise governed by fortune and by God that men with their wisdom cannot direct them and that no one can even help them; and because of this they would have us believe that it is not necessary to labour much in affairs, but to let chance govern them. This opinion has been more credited in our times because of the great changes in affairs which have been seen, and may still be seen, every day, beyond all human conjecture. Sometimes pondering over this, I am in some degree inclined to their opinion. Nevertheless, not to extinguish our free will, I hold it to be true that Fortune is the arbiter of one-half of our actions, but that she still leaves us to direct the other half, or perhaps a little less.

I compare her to one of those raging rivers, which when in flood overflows the plains, sweeping away trees and buildings, bearing away the soil from place to place; everything flies before it, all yield to its violence, without being able in any way to withstand it; and yet, though its nature be such, it does not follow therefore that men, when the weather becomes fair, shall not make provision, both with defences and barriers, in such a manner that, rising again, the waters may pass away by canal, and their force be neither so unrestrained nor so dangerous. So it happens with fortune, who shows her power where valour has not prepared to resist her, and thither she turns her forces where she knows that barriers and defences have not been raised to constrain her.

Nicolo Machiavelli, The Prince, CHAPTER XXV, “What Fortune Can Effect In Human Affairs, And How To Withstand Her”

What remains beyond the predictable storms of floods of history are the true uncertainties, the unknown unknowns, and these pose a danger we cannot predict, quantify, or insure. They are not, then, risks in the strict sense. They are existential uncertainties.

It could be argued that our inability to take specific, concrete, effective measures to mitigate the obvious uncertainties of life has resulted in religious responses to uncertainty that systematically avoid falsifiability and thereby secure the immunity of hopes to exterior circumstances. Whether or not this has been true in the past, merely the recognition of existential uncertainty is the first step toward rationally assessing them.

Existential risk suggests a clear course of mitigating action; existential uncertainty cannot, on the contrary, be the object of planning and preparation. The most that one can do to address existential uncertainty is to keep oneself open and flexible, ready to roll with the punches, and responsive to any challenge that might arise, meeting it at the height of one’s powers; any attempt to prepare specific measures will be fruitless, and quite possibly counter-productive because of the wasted effort.

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## The Re-Proletarianization of the Workforce

### 15 December 2012

Saturday

Was the rise of the middle class

a temporary aberration of industrial capitalism?

In several posts I have argued that the view that Marx may be dismissed because the end of the Cold War “proved” that capitalism has defeated communism (a thesis that might also be identified with Fukuyama’s “end of history” thesis) is mistaken. I am not a Marxist sentimentalist, who, like many on the left today, needs to believe in Marx, including that which has been shown to be manifestly false or inadequate, but the point I want to make has nothing to do with a sentimental connection to Marxist thought. To twist the world around so that it either agrees perfectly with Marx or utterly overthrows Marx is to completely miss the point. What is the point? The point is to find that which is of perennial value in any first rate thinker.

Here are some of the posts in which I have addressed this question:

Globalization and Marxism

My argument in these posts has been that, since the industrial revolution is still unfolding, it is not yet the case, nor has it yet been the case in global history, that the economy of the entire world has been industrialized — a condition that I have called industrialization at totality. Therefore the predictions of Marx that, once industrialization had run its course, consolidations within industry would concentrate wealth at the top and gradually tend to immiserate the proletariat until the proletariat was better off overthrowing the few at the top and taking over industry for themselves, still remain as predictions that could be proved to be true by subsequent historical events.

We are now witnessing the extension of the industrial revolution to those parts of the world that were called the “Third World” during the latter part of the twentieth century. China and India are rapidly industrializing, and it is changing the overall structure of the world economy. It was just reported in the past week that, by 2030, China’s economy will be the largest on the planet (though not by a per capita measure). In the later twenty-first century, Asia will consolidate its industrialization while Africa will be well on its way to industrialization. Sometime in the twenty-second century we may see the entire world consisting of industrialized nation-states in which subsistence farming simply no longer exists.

In this scenario of global industrialization as I have outlined it above, it is likely that the living standards of peoples all over the world will have been greatly improved, and this flies in the face of the Marxist prediction of immiserization. If this is the case, there will be no incentive for worldwide proletarian revolution, and then at that time Marx will have been proved wrong. But the convergence of the world entire upon industrialization is only the beginning of the story.

We are now seeing in the advanced industrialized economies what industrialized capitalism looks like in its senescence, and what it looks like, unfortunately, is macro-parasitism in the form of crony capitalism. Those who are in a position of influence with respect to the privileged elites of industrialized nation-states shamelessly use their influence to obtain favorable circumstances for themselves and their cronies in industry. Thus while the initial stage of global industrialization will likely bring significantly higher living standards to the masses, if this system is allowed to develop globally as it has developed in North America and Western Europe — and I see no reason why it should not do so — what we will see one or two hundred years after the consolidation of global industrialization is a global regime of crony capitalism every bit as egregious as Marx predicted.

This is a development that we should all find worrying. We are in danger of creating a society as backward and as retrograde as feudalism at its worst, only feudalism with the instruments of industrialized technology at its command — something that Winston Churchill might well have called, “the abyss of a new dark age made more sinister, and perhaps more protracted, by the lights of perverted science.”

While part of this development is due to blind forces acting within the economy, part of it is a policy choice that has been knowingly pursued by those in a position of political power. Of course, policy choices can, in turn, be the result of blind political forces, in contradistinction to the blind economic forces that act directly upon the economy, but the result is the same. When political organization careens thoughtlessly from one crisis to the next, never acting but only reacting to the forces to which it is subject, this is an abject dereliction of political responsibility by those placed in a position that gives them the opportunity to do something other than merely react to pressure.

In previous posts such as Celebrating the American Laborer and The Genealogy of Labor I have pointed out how the so-called “middle class” has been fetishized in American political thought, but even as it is fetishized it is being reduced to insignificance by the economic and political forces mentioned above. And because of the ability of large sections of the population to engage in economic self-deception (of the kind I described in Progress, Stagnation, and Retrogression), we might continue to frame ourselves as a “middle class society” for decades even while the middle class is disappearing.

So I, too, risk appearing as just another commentator bemoaning the loss of the middle class in the US, so that what I say is very likely to be drowned in the background noise of economic complaint. But the problem is real, and it is worse than we suppose. It is bad enough that in the advanced industrialized nation-states we could be said to be witnessing the re-proletarianization of the workforce. What is a proletariat? The word “proletariat” comes from the Latin prōlētārius, the lowest class of Roman citizens. The Oxford English Dictionary defines a proletariat as, “Wage earners collectively, esp. those who have no capital and who depend for subsistence on their daily labour” and “The lowest class in society; the poor, the masses.”

I have observed that absolutely no one today wants to be called a proletariat, and because of the economic self-deception that I described in Progress, Stagnation, and Retrogression it is entirely possible to be a proletariat for all intents and purposes while denying that one is such a thing — or even that there is such a thing. This is the opposite of class-consciousness: it is class unconsciousness. So if it is part of orthodox Marxist doctrine that class consciousness will emerge with the growth of the proletariat, then in this I think Marx was dead wrong. But if this sad scenario comes to pass, class unconsciousness will be sufficient, because we know from Freud that the unconscious can manifest itself in inconvenient forms, such as neuroses. We should expect to see, then, social neuroses — the sort of thing one would expect from neurotically miserable civilizations.

The proletariat is an industrial serf — the peasant of the factory system — and a serf or a peasant feels little or no connection to the social order of which we forms the lowest tier. This is a problem. If those whose work makes industrial-technological civilization function come to realize that they have no stake in this civilization, they will do nothing to sustain it, nothing to maintain it, nothing to preserve it if it is in danger. Thus the re-proletarianization of the workforce is potentially a profound source of existential risk — the risk of flawed realization.

It has been argued that a society must get its system of rewards more or less right if it is going to incentivize productive and innovative behaviors, and this is the argument that is used to defend stock options with an up side and no down side, to defend disproportionately large executive pay packages, and in general to defend every method that the privileged employ to milk the system for their own exclusive benefit. That these are spectacularly self-serving arguments made by the shills of the privileged class has not stopped them from being made — repeatedly.

But there are two sides to the incentive system: capital and labor, and labor requires its incentives no less than does capital. Some interesting results in experimental economics in scenarios designed by game theorists give us the precise counter-argument to the incentive system argument as used to defend the absence of upper bounds to elite compensation. One such game involves giving a certain amount of money to player A with the instruction that Player A must share the money with Player B. If player B accepts the proposed allocations of shares, both players get to keep the money; if player B rejects the allocation of shares, neither player gets anything. When such experiments are run, most offers made by player A are for a 50/50 split, and these offers are almost always accepted. When player A offers an allocation that disproportionately advantages player A, like a 90/10 split favoring player A, such allocations are almost always rejected. In other words, player B would usually rather get nothing than see player A get almost everything.

This is an ominous result for contemporary economics in the advanced industrialized nation-states, because the gradual convergence upon a “winner take all” incentive system is pushing the rewards system in the direction of giving the privileged classes almost everything while giving the unprivileged masses very little of what is available over all. Now we know from game theory and experimental economics that players almost always refuse such a deal when it confronts them in an explicit form.

It is no leap from this result to get to the point that the less privileged working classes who make the economies of advanced industrialized nation-states operate, when they fully realize that the deal they are getting is so disproportionately small, that they would prefer nothing at all to allowing the other player in the game to get almost everything. Of course, the masses are slow to realize this, and the elite classes who also operate the mass media are in no hurry to explain this to the masses. But we cannot count on a system of radically disproportionate rewards to last indefinitely.

If real, substantive, systematic, and effective measures are not taken to approach a more equal distribution of the rewards of industrial-technological civilization, Marx will be proved right in the long term. If those who are the primary producers of this wealth do not share in the wealth, they will see no reason to continue to cooperate in the production of wealth in which they do not share.

Of course, a lot can happen in the two to three hundred years it could take for global industrialization to consolidate its position and then to reach the sad state of crony capitalism now seen primarily in only the most mature industrialized nation-states. Unprecedented and unpredictable historical developments of many different forms could hold off global industrialization or direct it into unexpected channels. In such cases, the proof or disproof of Marx may have to wait even longer.

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## Progress, Stagnation, and Retrogression

### 28 November 2012

Wednesday

Saint Augustine made a distinction between progress for the City of Man and progress for the City of God.

Recently I wrote about progress in Biology Recapitulates Cosmology where I contrasted Stephen J. Gould’s explicit anti-progressivism to more recent forms of progressivism found in futurism and technological thought. Western thought has a long history of finding both progress and decadence in its own historical record. Even as St. Augustine was writing while the Roman Empire was falling apart and there were barbarians literally at the gates of Hippo where Augustine was Bishop, Augustine acknowledged that the City of Man was in a bad way and likely to get worse, but the City of God was going from triumph to triumph as divine providence led the way — thus rescuing a kind of progress from the ruins of a civilization in the process of collapsing around him. Augustine’s was a brave gambit, and later attitudes tended to be more narrowly progressive or declinist, not making the distinction that Augustine made.

Is Augustine’s thought an example of smuggling progress into human history by way of divine providence, or are contemporary conceptions of progress a secularized formulation of divine providence, as Karl Löwith would have argued? This is an interesting question, but I am not going to try to answer it here. I have strong views on this, and I want to write a detailed post (or several posts) specifically about this question (though I have already written some specifically about the idea of secularization, in addition to citing Löwith’s influential work in several posts, such as Addendum on ontological extrapolation, Addendum on Incommensurable Civilizations, The Feast of Saint Nicholas, and Marxist Eschatology).

In any discussion of progress one must carefully distinguish between the kinds of progress that are possible. For example, we can distinguish at least technological progress and moral progress and aesthetic progress, just for starters. One might explicitly argue for technological progress, and all those measures of quality of life directly attributable to technological progress like per capita GDP, access to clean water, and so forth, while saying nothing about moral progress or aesthetic progress (as seems to be the case with Kevin Kelly’s explicit argument for progress in What Technological Wants). I don’t think that many people today would assert that the pictures painted today are obviously better than the pictures painted in the past even if our technology seems obviously superior. Therefore aesthetic stagnation might go hand-in-hand with technological progress. I also doubt that many today would argue that we are becoming obviously more ethical with the passage of time and the growth of technology.

It would also be a good idea to distinguish between stagnation and retrogression, so that we are thinking in terms of a continuum that runs between the polar concepts of progress and retrogression, with stagnation as the “golden mean” between the two (as it were). It is common to use the term “stagnation” not only to indicate a socioeconomic system that is moving neither forward nor backward, but also for socioeconomic systems that are losing ground and moving backward. Thus making the distinction between stagnation and retrogression, and placing both in relation to progress, allows us to differentiate societies that are static from societies that are declining. For lack of a better term, we can call the continuum between the polar concepts of progress and retrogression the continuum of progress.

To gain a proper appreciation for the role that the continuum of progress has played in human affairs we must further distinguish the perception of progress, stagnation, or retrogression from any quantifiable measure of progress, stagnation or retrogression. If we want to think about economics in isolation (i.e., in isolation from other possible social measures of progress), we can immediately see the significant role that perceptions play, as it is often claimed that the collective action of declining consumer confidence can cause an economy to go into recession even if there is no other trigger for an economic downturn. Keynes’ remarks about the role of “animal spirits” also has a role to play in economic perceptions in contrast to economic reality.

Human beings being what they are, a significant divergence between appearance and reality can be maintained for some period of time if enough people are prepared to delude themselves. This is am important point, so I want to go into it in more detail, and most especially I want to elucidate economic appearance and reality in terms of two philosophical ideas: self-deception and the sorites paradox.

I have mentioned in other posts that I think the role of self-deception in human affairs is greatly underestimated. Self-deception is simply lying to oneself, and it is especially associated with the thought of Jean-Paul Sartre. People lie to themselves all the time, and for a variety of motives. If you approach life as though everyone was always on the up-and-up, you will soon find yourself disabused of that illusion, for it is illusion rather than reality that is the order of the day in human affairs. Human society only exists in virtue of a complex tapestry of fine-crafted duplicity that people teach themselves to believe in as the price of being part of any society.

The sorites paradox is an ancient idea associated with the ambiguous use of terms. If you have a heap of grains of sand, and take away one grain of sand at a time, when does it cease to be a heap? Contrariwise, if you begin adding one grain of said to another, when does it begin to be a heap? The same paradox is also formulated in terms of baldness: if you pluck the hair off a head one by one, when does the head qualify as being bald?

So, what do self-deception and the sorites paradox have to do with the continuum of progress as it applies to economic appearance and reality? Economic progress is one of the most quantifiable forms of progress of all human endeavors. Whatever economic measure we care to take — GDP, per capita GDP, steel production, potable water, and so forth — we can measure these and monitor progress based upon them. If you decide that progress is a nation-state in which there is a chicken in every pot, you can measure if there is a chicken in every pot, and how often, etc. So it would seem, given these relatively discrete measures, that the measurement of economic progress would be difficult to fudge.

Nothing could be further from the truth, and much of this has to do with the predominant role that human perception plays in large economies that can only be measured statistically. Because of the potential divergence between economic perception and economic reality, a population might believe itself to be experiencing progress even while it is moving backward. Or a population might believe itself to be moving backward even while objective measures demonstrate progress (of whatever sort of progress is defined as progress by that society).

Statistical measures of a large economy bear a strong resemblance to the sorites paradox. You might be able to demonstrate that a population is incrementally growing wealthier, but since a heap of wealth is always just a heap of wealth, and you don’t notice a few dollars more or a few dollars less, any more than you would notice a few grains of sand more or less on a heap of sand, it is entirely possible that even as a society grows wealthier, it might believe itself to be growing poorer, or even as a society is growing poorer, it might believe itself to be growing richer. Such counter-factual perceptions, if maintained by collective self-deception, can make an entire nation believe that it is going in the right direction when it is not, or vice versa.

Schumpeter noted that the growth of mature industrialized economies usually hovers about two percent, and although this modest two percent growth will double the size of the economy every 35 years — which is an impressive achievement if we think of the long history of stagnation of agricultural civilization — it probably isn’t enough to satisfy those who believe that they are getting a bad deal from the system. Schumpeter might have also noted that a two percent growth rate wouldn’t be noticeable from year to year, even if it is noticeable in the longer term — being noticed is different from being measurable. And if we add the difficulty of noticing two percent growth to the possibility of collective self-deception that growth is not happening, well, people may well believe that they are going backward even when the economy doubles in size every generation.

What I wrote in the above paragraph about growth also holds for economic decline: a decline of two percent per year might never be noticed year-on-year, even if it is obvious over the longer term. And if there is a collective self-deception that things are getting better, because we want to believe that things are getting better, people can easily delude themselves that the world is improving even as they are impoverishing their descendents.

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## The Genealogy of Labor

### 3 September 2012

Monday

Michel Foucault

A Reflection for Labor Day

Foucault is perhaps most remembered for his early books, written in a very dense and at times elusive style, which constitute what have been called “critiques of historical reason.” Foucault takes up the ideas of madness, the clinic, prisons, philology, biology, political economy, and eventually (later on) sexuality, providing a staggering wealth of documentation from original source materials, even while one understands that these details are only there to serve a grand plan that is never made quite explicit. I have previously quoted the anthropologist Clifford Geertz, who characterized Foucault’s style as, “sweeping summary with eccentric detail” (cf. Foucault’s Formalism). Foucault’s effort owes much to Nietzsche’s earlier efforts to formulate what he called a genealogy of morals. Foucault said that, “Genealogy is gray, meticulous, and patiently documentary,” but for Nietzsche it was colorful, inventive, and exciting, and I think these are also qualities that made Foucault’s intellectual genealogies so interesting.

Since Foucault’s fascinating genealogies have appeared, others have taken up the task and gone on to write genealogies of all manner of historical phenomena that had, until recently, been regarded as largely unproblematic. Foucault was the next great “master of suspicion” after Nietzsche, Marx, and Freud (as identified by Paul Ricoeur), and Foucault’s influence has spawned suspicion enough to call into question every received institution of Western civilization. From this perspective, Foucault can be seen as part of a reaction against progressive Whiggish history more than as a continental embodiment of the largely Anglo-American history of ideas, to which genealogy is related, but only distantly.

I wonder if any of Foucault’s followers has written a genealogy of labor — certainly it would be a rich field of study. Foucault discussed labor in his The Order of Things, and even called one chapter of this “Labor, Life, Language,” but Foucault takes up labor from the stand point of the discourse of political economy and not from the stand point of the labor movement. I started thinking of this today when I was writing a post on my other blog about the labor movement in recognition of Labor Day, A Celebration of the American Laborer. A genealogy of labor that brought sweeping summary with eccentric detail to the gray, meticulous, and patiently documentary work of a critique of the historical reason as it underlies the labor movement would be a real achievement, and something that someone ought to take up if they haven’t already done so.

In that post I discussed my discomfiture with labor slogans and the labor movement generally speaking. I did not do justice to my chosen topic because there is so much more to say, but while I was struggling with setting limits to how far I would go in attempting to understand the social semiotics that characterize labor today, which is to say labor in industrial-technological civilization, I realized how easily this topic would play into a Foucauldian critique.

Foucault’s constant drumbeat throughout his critiques of historical reason is that the institutions of contemporary society that we have become accustomed to seeing as expressions of an emerging and growing humanitarianism are rather methodologies of control, and the professionalized discourses in which they are formulated — whether psychiatry or economics or penology — are in fact discourses of power that serve to channel privilege within a society. Although Foucault distinguished himself among philosophers of his generation by sedulously maintaining his distance from Marxism, it would be difficult to imagine a more thorough-going Marxist critique of the oppression of the masses than that formulated by Foucault.

The labor movement has been dominated, intellectually speaking, by those on the left coming from a Marxist perspective (even if, in the US, they could not for obvious socio-political reasons make their Marxism explicit), and as such one ought to expect the labor movement to be part of the critique of power relations in the industrialized world, but the labor movement has itself become a part of that industrial-technological establishment and now would rightly be subject itself to a critique for its professionalized discourse of labor relations and worker protections. The AFL-CIO campaign Work Connects Us All, which I just mentioned on my other blog, is a perfect example of this.

While the labor movement is part of the Marxist tradition as I mentioned above, it is also part of the humanist tradition. In so far as the labor movement is part of that broad social movement that seeks to humanize the institutions of industrialized society, it is vulnerable to the same critique that Foucault leveled against “humane” psychiatry, mental institutions, clinics, and prisons. Just as utopian dreams usually issue in dystopian nightmares, so too humanitarian good intentions more often than not issue in dehumanizing, depersonalizing policies. The “humane” workplace is more and more coming to resemble those other institutions, what Erving Goffman called “total institutions,” that interested Foucault.

In the attempt to make people feel involved, connected, and important by way of their labor, the labor movement must inevitably treat human beings as laborers, and it may well be that, even though the working class spends the greater part of its time engaged in alienated labor, and that this engagement necessarily has a formative influence on life and personality, workers might not want to be identified with their work or reduced to their labor. Some may even feel that this identification with a task they perform in exchange for financial compensation is an insult and slight in view of their other talents and abilities. Certainly not all, but some.

The contemporary workplace has become a regime of observation and documentation and regimentation far more encompassing than Bentham’s panoptican, which latter drew Foucault’s attention and has been a consistent point of reference for Foucault’s followers ever since (I wrote about the panopticon in A Flock of Drones). The panopticon only observed individuals at a particular moment; the regime of workplace surveillance now encompasses the life of the individual entire, from cradle to grave, and in so doing eliminates the personal life. An individual’s history before being employed may be investigated, their pictures and statements on social media examined, they will likely be tested for drugs that have nothing whatsoever to do with their performance on the job, their e-mail, web browsing, and phone calls while working may be monitored, and so long as they are employed they will continued to be monitored on the job and off the job, to whatever invasive extent sanctioned by the professionalized legal discourses constructed as a means to relieve individuals of the responsibility for their own lives. (I’m sure Freud would have had something interesting to say about the professional classes monitoring the urination of the working classes.) Of course, all of these things are done in the name of safety and order and the well-being of all — but aren’t they always?

What has the labor movement done about this unprecedented invasion of privacy? Nothing. What has the labor movement done about the extirpation of the private life? It has contributed to it, by identifying the private life with work, job, career, and professional status. The labor movement has only served to facilitate the institutionalized regimentation of worker’s lives, acting as agents for the powers that be, because they obtain their living by the same means as the owners and the managers they affect to confront.

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## Creative Destruction

### 15 August 2012

Wednesday

Joseph Schumpeter coined the phrase ‘creative destruction’ to describe the growth of a capitalist economy.

The phrase “creative destruction” is indissolubly linked to Joseph Schumpeter, who coined it. Schumpeter devotes a chapter of his masterpiece, Capitalism, Socialism, and Democracy, to “The Process of Creative Destruction.” It has been observed that Schumpeter’s work was neglected for decades until in the late twentieth century the role of the entrepreneur in economic growth began to be appreciated.

I would argue that half of Schumpeter’s famous phrase continues to be neglected today, since the focus on entrepreneurial activity has primarily taken the form of singing the praises of innovation and the virtues of start ups, without an equal appreciation of the importance of business failure, bankruptcy, and economic collapse, despite the very prominent role that all of these phenomena have in the world today. It has been said that capitalism without bankruptcy is like Christianity with Hell, and this comparison is telling, more telling than I think most people realize, because the doctrine of Hell is about as unpopular as the idea of bankruptcy.

What events in recent world history have been more important than, for example, the economic collapse of the Soviet Union, the dot com crash, the bankruptcy of Enron, or the bankruptcies of Lehman Brothers and Bear Stearns? There have been many events of roughly equal importance to these massive examples of the “destructive” phase of “creative destruction,” creative examples among these, but it would be difficult to name obviously more important events that these for shaping the world in which we live.

I think it is probably a little exhilarating for business types and economists to talk about the virtues of innovation, but the exclusive focus on innovation creates a kind of conceptual vacuum around its opposite number, but we are in as much need to innovative forms of business dissolution as for business innovation. The recent financial crisis and the consequent “great recession” (as it is now being called) focused a lot of attention on enterprises that were perceived to be “too big to fail.” That is to say, if very large institutions were allowed to fail catastrophically, the damage throughout the economy could be greater than that of keeping a failing business afloat. “Too big to fail” talk was also a constant accompaniment of many national crises, like that in Greece now, or the Argentine debt default more than ten years ago. I can easily imagine, in this spirit, someone arguing that the Soviet Union was “too big to fail.” In fact, I am certain that there are those who are argued that an engineered “soft landing” for the Soviet Union might have come at a lower human cost than that more or less catastrophic failure that the Soviet Union did indeed experience.

It is just as important for us to rid ourselves of what we no longer need as to innovate new products that are suddenly the thing that everyone needs. In my discussion of technological succession I emphasized that apparently exponential technological growth is often the result of several overlapping technologies succeeding each other in quick succession. This has certainly been the case with personal computers, as one generation of technology has rapidly succeeded another, and people have thrown out one computer after another as technology advances so quickly that the old computers are not merely inconvenient, but essentially useless.

There have been many news stories about computer waste, so if an individual wants to be informed about the process, the information is there for the taking. I recommend, rather than reading some news stories, watching the film Manufactured Landscapes, about the work of photographer Edward Burtynsky, in which you can see the painstaking work in a Chinese village of breaking up old computer parts, as well as the much larger scale but essentially parallel task of the ship breaking yards of Bangladesh.

It isn’t just individual objects like computers and ships that must be destroyed, or simply abandoned and allowed to sink into the landscape. In my post on Failed Cities I suggested that the process applies to entire cities as well:

“…industrial succession is part of the Industrial Revolution, and that the civilization that has emerged from industrialized societies is a civilization that must reckon with the industrial succession that comes with the Industrial Revolution. The rational approach to this would be to plan for cities to emerge around particular technologies, and for these same cities to be abandoned gradually as that same technology inevitably becomes obsolete.”

Ideally, the rational approach to obviously temporary supply chains would to build the facilities with the intention that they will be taken down and taken apart when this particular industrial process is succeeded by another industrial process. Unfortunately, civilization has not yet reached the point at which this level of planning and foresight can be integrated into large scale business operations.

In another sense, however, cities do in fact embody this idea — cities actually embody creative destruction — in the way that the build environment on the whole is always in flux. The same film I mentioned above in connection with computer waste disposal, Manufactured Landscapes, also features the ever-changing urban landscape of Shanghai.

Cities that have been continuously inhabited for long periods of time are inevitably built up and built over, sometimes intentionally destroyed no longer useful structures, and sometimes having existing structures destroyed by war or natural disasters. This is what makes cities so fascinating to archaeologists, since anywhere you dig is likely to reveal the history of the site in the layers below ground.

The city, then, considered from the perspective of the big picture and la longue durée, are or ought to be the model for the economy overall, which suggests that cities are the macroscopic model of rebuilding that needs to be realized on a microscopic level throughout the economy. We need an urbanism of objects to take control of our economic innovation and dissolution. Perhaps most macro-economic planning has been a failure in part due to the fact that it has not been conceived in this way.

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## François Hollande’s Socialism

### 5 July 2012

Thursday

What does it mean to be a socialist in the 21st century, in the wake of a century of failed socialist and communist social experiments? We have already seen the use of the phrase “21st century socialism,” particularly in the work of Heinz Dieterich Steffen, who has been influential in Latin America. Dieterich has been a professor at the Universidad Autónoma Metropolitana in Mexico, D.F. since 1977; I first heard about him when I was in Ecuador in 2009. Dieterich has been closely associated with the left-leaning governments of Venezuela and Bolivia.

Partly under Dieterich’s influence, and partly simply using his slogan of socialism of the 21st century, Venezuela, Bolivia, and to a lesser extent Ecuador engaged in a so-called Bolivarian Revolution. But the Bolivarian Revolution has fizzled. Recently there was a good critique of the movement in Foreign Policy magazine, The Bolivarian Legacy by Douglas Farah, subtitled, “Hugo Chávez and his leftist allies will leave little behind other than failed economic policies, massive corruption, and shrinking political freedoms,” which pretty much sums up the author’s conclusions. I would have framed it even more strongly. There is absolutely nothing whatsoever “new” or “revolutionary” or “twenty-first century” about caudillo-style politics masked by claims to represent “the people.”

So much for twenty-first century socialism in Latin America. Now it seems that we are to find out want twenty-first century socialism means in France under the new president François Hollande. This, I think, will be rather more effective and more of a movement to reckon with, than the tendentious ideological formulations of Heinz Dieterich. Hollande is a career politician, and he will act as a politician, which is to say he will rule by policy, in the context of his party, and employing the institutional structures of the French government, which has been a strongly centralized state since the Sun King turned France into an Enlightenment superpower united under absolute monarchy. This is more about institutions than it is about personalities. By all accounts, Sarkozy was much more of a “personality” than Hollande.

The Financial Times ran two stories in today’s paper, Wealthy hit hardest as France raises taxes by Hugh Carnegy in Paris, and France: Ready to jump ship by Hugh Carnegy and Scheherazade Daneshkhu, both detailing French plans to dramatically raise taxes and to place salary caps on executives.

These policies will have a strong selective effect. Some wealthy people will leave France and take their businesses with them — perhaps many will do so. David Cameron has already promised to welcome French “tax exiles” to the UK:

“If the French go ahead with a 75% top rate of tax we will roll out the red carpet and welcome more French businesses to Britain and they will pay taxes in Britain and that will pay for our health service, and our schools and everything else.”

Thus France will lose some of its wealthiest citizens, some of its businesses, probably some international investment, and it will likely decline in growth, productivity, and competitiveness. If you want to start a dynamic new business in Europe, and believe that it may come to be worth a lot of money, you certainly won’t try to start that business in France.

That being said, is this policy necessarily ruinous for France? The answer to this depends upon how you define “ruinous.” I have no doubt that there are many who will characterize the developments in France as ruinous, or something similar, but it is to be observed that Hollande is not trying to foment a social revolution, he isn’t proposing the European equivalent of a Bolivarian Revolution, and he isn’t laying plans for mass nationalizations and confiscations, although the tax levels are already being called “confiscatory.”

I would not be at all surprised to see France settle into a comfortable if stagnant and ever-so-genteel decline — a decline that may be as comfortable to the majority of French citizens as Japan’s “lost decade” was to a majority of Japanese. Japan was and is a very wealthy country. It no longer aspires to great power status, and so its people could be relatively comfortable even in the midst of extended stagnation. Similar observations hold for France: France was and is a wealthy country; it no longer aspires to great power status, and so its people could be relatively comfortable even in the midst of extended stagnation. Moreover, mass sentiment in France may well be on the side of an economic leveling that will eliminate France as a major global economic competitor, but will nevertheless confirm the people in their moral rectitude; and in feeling that they are in the right, the people may be more satisfied with this moral stance than they would be with higher economic growth rates, especially if part of the growth rate is eaten up by executive salaries and shareholder dividends.

What I am saying is that Hollande’s variety of socialism may well be sustainable, especially in France, and perhaps also elsewhere in Europe. France could become a place that is perhaps not very economically vibrant, but one where the needs of the people are met with a reasonable degree of comfort (rather better than the comfort provided by the socialist economies of Eastern Europe behind the Iron Curtain), where freedoms and human rights are respected (rather more respected, again, than behind the Iron Curtain), and where the gap between the poorest and the wealthiest is systematically narrowed by legislation.

A sufficient number of “true believers” in the cause of France will remain in France to keep the major enterprises functioning, even if they could earn many times more if they went elsewhere. As I noted above, Hollande’s policies will be strongly selective. Those for whom wealth is of paramount importance will choose to leave; those for whom France, and being French in France, is of paramount importance, will choose to stay. From this selective process, France may gain in French nationalism even as it declines in economic competitiveness. A socialist France cannot expect to be a global economic competitor, but if it can keep the lights on and the people fed, this may be more important to the French masses than improving standards of living.

It has become an almost irritatingly repetitive commonplace that mathematicized economics cannot account for all the forces and complexity of an economy. I do not deny that this is true. A mathematical model is always a simplification that derives its predictive power precisely from being simpler than reality. There is no point is constructing a model that is a duplicate of the phenomenon to be modeled; the map, as we all know, is not the territory. Usually when this “criticism” of economics is made it has a strong moral slant to it, but surprisingly the criticism often misses some of the most important moral truths of economic life: that sometimes people will prefer to be poor and proud rather than to be slightly wealthier but at a moral cost they are unwilling to pay.

This is one formulation of socialism — trading moral rewards for economic rewards — though not one the socialists are likely to endorse. The tradition of socialist and communist thought is so steeped in absurd fantasies of maximized abundance in which, “each man’s share of labour would be light, and his portion of leisure ample” (in the words of Malthus), that it is all but impossible to get them to see that they are trading wealth for moral rectitude. And if that is what people want, that is what they will get.

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## Gibbon, Sartre, and the Eurozone

### 3 July 2012

Tuesday

Mario Monti said of the Euro that, “the will to make it indissoluble and irrevocable is there.” Today, perhaps yes, but what will the will be tomorrow?

Each time the Eurozone puts together another bailout package the markets follow with a brief (sometimes very brief) rally, which collapses pretty much as soon as reality reasserts itself and it becomes obvious that most of the measures constitute creative ways of kicking the can down the road, while those more ambitious measures that are more than kicking the can down the road are probably overly ambitious and not likely to be practical policies in the midst of a financial crisis.

Simply from a practical point of view, it is difficult to imagine how anyone can believe that a more comprehensive fiscal and political union can be brought about in the midst of the crisis, although formulated with the best intentions of saving the Eurozone, since the original (and much more limited) Eurozone was negotiated, planned, and implemented over a period of many years, not over a period of few days as inter-bank loan rates are climbing by the hour. Apart from this practical problem, there are several issues of principle at stake in the Eurozone crisis and the attempts to rescue the European Monetary Union.

Mario Monti was quoted in a Reuter’s article, Monti says EU hinges on summit talks outcome: report, in defense of strengthening financial and political ties within the Eurozone as a way to save that Euro that:

“Europeans know where they’re going… the markets are convinced that having given birth to the euro, the will to make it indissoluble and irrevocable is there and will be strengthened by other steps towards integration.”

Can the Euro be made “indissoluble and irrevocable”? Can anything be made indissoluble and irrevocable? I think not, and this is a matter of principle to which I attach great importance.

I have several times quoted Edward Gibbon on the impossibility of present legislators binding the acts of future legislators:

“In earthly affairs, it is not easy to conceive how an assembly equal of legislators can bind their successors invested with powers equal to their own.”

Edward Gibbon, History of the Decline and Fall of the Roman Empire, Vol. VI, Chapter LXVI, “Union Of The Greek And Latin Churches.–Part III.

Since I have quoted this several times (in The Imperative of Regime Survival, The Institution of Language, and The Chilean Model, e.g.), implicitly maintaining that it states an important principle, I am now going give this principle a name: Gibbon’s Principle of Inalienable Autonomy for Political Entities, or, more briefly, Gibbon’s Principle.

As I have tried to make explicit, Gibbon’s Principle holds for political entities, but I have also quoted a passage from Sartre that presents essentially the same idea for individuals rather than for political entities:

“I cannot count upon men whom I do not know, I cannot base my confidence upon human goodness or upon man’s interest in the good of society, seeing that man is free and that there is no human nature which I can take as foundational. I do not know where the Russian revolution will lead. I can admire it and take it as an example in so far as it is evident, today, that the proletariat plays a part in Russia which it has attained in no other nation. But I cannot affirm that this will necessarily lead to the triumph of the proletariat: I must confine myself to what I can see. Nor can I be sure that comrades-in-arms will take up my work after my death and carry it to the maximum perfection, seeing that those men are free agents and will freely decide, tomorrow, what man is then to be. Tomorrow, after my death, some men may decide to establish Fascism, and the others may be so cowardly or so slack as to let them do so. If so, Fascism will then be the truth of man, and so much the worse for us. In reality, things will be such as men have decided they shall be. Does that mean that I should abandon myself to quietism? No. First I ought to commit myself and then act my commitment, according to the time-honoured formula that “one need not hope in order to undertake one’s work.” Nor does this mean that I should not belong to a party, but only that I should be without illusion and that I should do what I can. For instance, if I ask myself ‘Will the social ideal as such, ever become a reality?’ I cannot tell, I only know that whatever may be in my power to make it so, I shall do; beyond that, I can count upon nothing.”

Jean-Paul Sartre, “Existentialism is a Humanism” (lecture from 1946, translated by Philip Mairet)

This I will now also name with a principle: Sartre’s Principle of Inalienable Autonomy for Individuals, or, more briefly, Sartre’s Principle.

If that weren’t already enough principles for today, I going to formulate another principle, and although this is my own I’m not going to name it after myself after the fashion of the names I’ve given to Gibbon’s Principle or Sartre’s Principle. This additional principle is The Principle of the Political Primacy of the Individual (admittedly awkward — I will try to think of a better name for this): political autonomy is predicated upon individual autonomy. In other words, Gibbon’s Principle carries the force that it does because of Sartre’s Principle, and this makes Sartre’s Principle the more fundamental.

At present I am not going to argue for The Principle of the Political Primacy of the Individual, but I will simply assume that Gibbon’s Principle supervenes upon Sartre’s Principle, but I wanted to make clear that I understand that there are those who would reject this principle, and that there are arguments on both sides of the question. There is no establish literature on this principle so far as I know, as I am not aware that anyone has previously formulated it in an explicit form, but I can easily imagine arguments taken from classic sources that bear on both sides of the principle (i.e., its affirmation or its denial).

Because, as Sartre said, “men are free agents and will freely decide,” the Euro cannot be made “indissoluble and irrevocable” and the attempt to try to make it seem so is pure folly. For in order to maintain this appearance, we must be dishonest with ourselves; we must make claims and assertions that we know to be false. This cannot be a robust foundation for any political effort. If, tomorrow, a deeper economic and political union of the Eurozone becomes of the truth of Europe, this does not mean that the day after tomorrow that this will remain the truth of Europe.

And this brings us to yet another principle, and this principle is a negative formulation of a principle that I have formulated in the past, the principle of historical viability. According to the principle of historical viability, an existent must change as the world changes or it will be eliminated from history. This means that entities that remain in existence must be so malleable that they can change in their essence, for if they fail to change, they experience adverse selection.

A negative formulation of the principle of historical viability might be called the principle of historical calamity: any existent so constituted that it cannot change is doomed to extinction, and sooner rather than later. In other words, any effort that is made to make the Euro “indissoluble and irrevocable” not only will fail to make the Euro indissoluble and irrevocable, but will in fact make the Euro all the more vulnerable to historical forces that would destroy it.

When I previously discussed Gibbon’s Principle and Sartre’s Principle (before I had named these principles as such) in The Imperative of Regime Survival, I cited an effort in Cuba to incorporate Castro’s vision of Cuba’s socio-economic system into the constitution as a permanent feature of the government of Cuba that would presumably hold until the end of time. This would be laughable were it not the source of so much human suffering and misery.

Well, the Europeans aren’t imposing any misery on themselves on the level of that which has been imposed upon the Cuban people by their elites, but the folly in each class of elites is essentially the same: the belief that those in power today, at the present moment, are in a privileged position to dictate the only correct institutional model for all time and eternity. In other words, the End of History has arrived.

Why not make the Euro an open, flexible, and malleable institution that can respond to political, social, economic, and demographic changes? Sir Karl Popper famously wrote about The Open Society and its Enemies — ought not an open society to have open institutions? And would not open institutions be those that are formulated with an eye toward the continuous evolution in the light of further and future experience?

To deny Gibbon’s Principle and Sartre’s Principle is to count oneself among the enemies of open societies and open institutions.

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