Wednesday, August 29, 2007

The economics of conscience?!"; :)

Tired of competing to get ahead of each other while we are (unintentionally) collaboration to fuck over our future?


ABSTRACT: The Economics of Conscience
This paper addresses the ethical engine that drives economics in the presence of complementarity. Scarcity, although relevant to an exchange of physical goods, shall not apply to intangibles such as horizonal length. If economic development transforms the composition of output demand away from materialistic consumption toward more reciprocal interests, social institutions must also evolve from models of competition. Competition among complements simply is doomed to fail, as it creates scarcity in this setting; cooperation is sought to restore horizonal length and efficiency here. Rivalry – and conflicts of value – are not the essence of interdependence; rather, reciprocity and mutual gain (or decline) is the rule. If so, then neoclassical theory has misspecified econo-mic relations as substitution (a conflict of value) rather than as complementary (a concert of value).
The impact is seen in an inappropriate choice of frames for regulation of economic concerns. Competition – too long cast as efficient – is stifling growth in knowledge, education and ethics, spawning ecological loss, social crisis and myopic culture in its consequential effects. Substitution – although essential in neoclassical theory – is here replaced by complementarity as our primary economic connection. Increasing returns say complementarity is our most general linkage, and an introduction of planning horizons – extending orthodox statics – strengthens the case for reciprocity. In a complementary universe, substitution has no application; competition retards while cooperation enhances output and growth. The whole system is centered on ethical linkages in its performance.
The paper raises some meaningful issues stemming from planning horizons, showing how longer horizons shift our relations away from opposition toward more harmonious social links. So would horizontal theory offer a new way out of our social malaise, through an ethic of social and ecological health and conscience. The argument is presented and implications are explored.

Some quotes I particularly like:

The question to ask on a balance of substitution and complementarity is about horizon effects. The answer is very general: longer planning horizons shift our relations away from substitution toward complementarity, assuming interhorizonal complementarity (i.e., that horizon effects are contagious, such that dHi≠j*/dHj* > 0).11 If so, what does this mean?
If longer horizons turn us away from substitution to complementarity, then efficiency also evolves from competition to cooperation. This suggests incentives should move from materialism under rivalry to intangibles shared jointly. As Maslow (1954, 1968) argued, the process of personal growth – self-actualization – advances from physical (lower order) requirements into a (higher order) realm of immaterial needs. If so, as we mature – individually and socially – output demand transforms from materialistic consumption toward more social, cultural and artistic concerns (if not thwarted by competition). This implies a horizonal shift away from substitution to complementarity in economic relations.
Furthermore rivalry operates to block complementary outputs – such as learning, information, ethics and love for examples – subverting access to intangible goods and longer horizons. Frustration of mature human needs shows up in a pattern of violence, myopia and materialism,12 manifest in escalating conflict and ecological loss. Social institutions so unfit to their requirements – like any analytical framework with assumptions unmatched to applications – shorten planning horizons as their primary economic effect. Horizonal linkages stay invisible, denied a role in our economics! If competition is really keeping us stupid and immature,

The planning horizon as a measure of conscience suggests some other important implications as well. To the extent it tracks the private internalization of social effects, spillovers are incorporated into imagined projections so are also taken into account before their actuation. ‘Do no harm,’ as ecologists say. If so, then longer horizons shall lead to peaceful human relations stemming from more rationality in our behavior instead of violent discord. The impact of myopia on ecological health is obvious, suggesting orthodoxy – in its substitution assumptions – has led us severely astray at a cost. The fate of future generations has been too long ignored, due to the harmful impact of competition on our planning horizons. So many examples come to mind of losses from myopic concerns – small, large and daunting in their immensity and danger – reforming economics by extending it through horizon effects seems to offer remediation.13 But how do we lengthen planning horizons through institutional change? This is a question in need of attention.

Horizonal lengthening comes from a sense of inclusion and ethics in social behavior; reciprocity is the rule and efficiency is the result. The irony is that competition not only empowers shortsightedness, but also encourages selfishness, predation and opposition. These incentives select for traits so hostile to cooperation, none of these social gains seem possible with this cultural legacy. Yet people are adaptable, left free to explore and develop their range. It is the impact of competition that turns us off from real learning to become “cautious, obedient people” (Kohn 1986, p. 131): threats shorten horizons, making us selfish and insecure. This is the main effect of competition on human psychology.25

Footnote 25:

E.g., cf. Kohn (1986, pp. 55, 61-65, 108, 110, 113, 123, 129-31 and 143 with original emphasis):
The simplest way to understand why competition generally does not promote excellence is to realize that trying to do well and trying to beat others are two different things. … Competition … precludes the more efficient use of resources that cooperation allows. … Beyond the greater efficiency of cooperation, it is also true that competition’s unpleasantness diminishes performance. … At best, the stressfulness of a competitive situation causes us to try to avoid failure. And trying to avoid failure is not at all the same thing as trying to succeed. …Compe-tition does not promote excellence. ... Whereas cooperation apparently contributes to high self-esteem, competition often seems to have the opposite effect. … Psychological health requires unconditionality… In competition, by contrast, self-esteem is conditional. …Something very like an addiction is at work here…: the more we compete, the more we need to compete. … In sum, the security that is so vital to healthy human development is precisely what competition inhibits. …Competition does not promote … substantial and authentic … individualism. On the contrary, it encourages rank conformity [and] … dampens creativity. … Creativity is anticonformist at its core; it is … a process of idiosyncratic thinking and risk-taking. Competition inhibits this process … [and] affects the personality. Turning life into a series of contests turns us into cautious, obedient people. … The chief result of competition … is strife.

The paper's concluding paragraph:

Neoclassical theory is stuck. Competition has starved our rational and emotional growth – a complementary interaction of organizational learning and teaching31 – and has spawned a myopic culture reeling in narcissistic concerns, savaged by ecological loss. Substitution assumptions shall not apply to complementary settings such as in education or the exchange of intangible goods. Such transactions suffer under rivalrous social systems. Scarcity is created thereby along with short horizons, though without a theory of planning horizons we cannot see these effects. So a horizonal economics is needed to bring us out of this swamp into a more reciprocal legacy of renewal and growth. This study opens social theory into a realm of fertile human potential for im-provement too long confounded by orthodox standards. So will horizonal theory yield an ethical economics centered on personal conscience and human welfare radiating complementarities.

Pass the J, hold hands, share your references, put down that gun, give your fellow a helping hand with their paper - it'll make both of yours better, look into the future, trust your neighbor, plan for your grandkids not just for yourself, elect the government on their plan for seven generations from now, not seven seasons from now, use open source, ask your profs why you most use databases that are closed the common joe, and for those of you who live in Toronto, be glad that you're in one of the world's cities where a dropped cell phone gets returned to you, instead of kept.
Make love, not war.
Share your knowledge - it can only grow.

Peace, Love, Happiness and Sustainability,

P.S. I now own four tye-died shirts. How many do you own?