Bubbles, bitcoins and the decision irrelevance of non-existent information

What do the following things have in common?

Shells (especially cowries), beads (whether made of stone, shell, glass or whatever), salt (including stamped salt cakes), cloth (from silk to wadmal, a coarse wool fabric), tool metals (iron, copper, tin, bronze) in various shapes, die cakes, gold dust, weighted gold, teeth, feather coils, strings of coconut discs, carved stone (also a tool material), animal skins, cattle, grain (notably barley and rice), pigs, coconuts, buffaloes, seeds, slaves, silver in lumps or shaped, tea (including in bricks), plaited palm-fibre rings, tobacco, beeswax, camphor, porcelain jars, human heads, cocoa beans, balls of rubber, coca leaves, logwood (mahogany) …

They are all things cited in anthropologist A. H. Quiggin's A Survey of Primitive Money: the Origins of Currency (1949) as being used as money. What this great variety of things with varying degrees of "moneyness" demonstrates is how money is a network good. At its simplest, money is something you pay for things with and hold so you can. It value as money depends on expectations that you will be able trade it with other people for goods and services that you want. In other words, that you can be part of a network of transactions, with money being transacted along transaction chains.

The most widely used (across time and space) money item.

Which means that goods can have consumption utility, production utility or transaction utility. The above goods may also have production or consumption utility, but their appearance in that list is because of their transaction utility. With particular goods having high levels of transaction utility in particular contexts--that is, in particular transaction chains. With cowrie shells being by far the most widespread money item in human history, being used for thousands years across several continents.

How do they have that transaction utility? Well, apart from various desirable physical characteristics (durable, divisible, not too heavy nor too bulky, etc) that they may have to greater and lesser extent, they have transaction utility from information about the expected behaviour of other economic agents in transaction chains. Hence the existence of such a wide variety of local monies.

Evolution of money
Hunter-gatherers have no use for money. They live in small groups where they know everyone and engage in repeated, indeed daily, interactions with them. There is constant pooling of resources in a life of connections, not transactions. Barter is something you do with outsiders.

Money grows up when societies get big enough, or connected enough, that people start interacting regularly with a wider range of people to build up expectations about what they value, but not so often as to create a personal connection such that resources are pooled. Instead, people start transacting with people, developing information about what they value. At this point, the well-known disadvantages of barter begin to bite and money evolves. With what becomes used as money being based on local circumstances.

Once any good begins to be used as money, its use as money drives up its value beyond its production or consumption value. If it does not, it ceases to be used as money and is consumed or used in production. Hence the reality of transaction utility. Which is a real utility, as money permits transactions that would otherwise not occur.

Information has to exist to matter
Note that expectations are crucial to the process. Note also that those expectations are entirely based on current information. As a principle of modern physics, there is no information from the future, and economics has no way around that. So, expectations can only be based on what we actually have information about.

At this point, it may be attractive to reason from a regress, particularly for money which has no production or consumption utility, only transaction utility. Such as bitcoins. We know that at some point its transaction utility will terminate. So, since its moneyness depends on expectations of future transaction utility, and it has no value beyond its transaction utility, the knowledge that such utility will certainly terminate should [so the argument goes] destroy any current transaction utility. As econblogger David Glasner puts it:

The problem I have is that bitcoins can’t be used for anything except as a means of payment for something else. Bitcoins provide no real service distinct from being a means of payment. Think about it; if a bitcoin can’t be used for anything except to be given to someone else in exchange, that means that someday, someone is going to be stuck holding a bitcoin with no one left to give it to in exchange. When that happens, that stinky bitcoin won’t be worth a plum (or plugged) nickel, or a red cent. It will be as worthless as a three-dollar bill. 

Now I grant you that that final moment of clarity might not happen for a long time – maybe not even for a very long time. But if anything is certain, it is certain that, sooner or later, such a moment must certainly come. But if it is certain that ultimately no one will accept a bitcoin in exchange, then it follows that no one forseeing that inevitable outcome would accept a bitcoin in exchange prior to that moment unless he or she is confident that there is some sucker out there who will accept in the interim. But since when does a theory of asset valuation premised on the existence of an unlimited supply of suckers count as an acceptable theory? Under the normal rationality assumptions that economists like to use, it is not possible to rationalize a positive price for a bitcoin at any point in its history.

Is the transaction utility of bitcoins weakly anchored, so likely to be highly variable on the basis of new information? Absolutely. So, in that sense, I agree with David Glasner, bitcoins are a "bubble" in the sense of being an asset likely to be highly unstable in value.

Where I disagree is that the regress from the certainty that at some (completely unspecified) time in the future they will cease to be traded has any implications for current decision-making as long as we have no specific information about when that event is likely to occur.

It is certain that, at some stage, homo sapiens will cease to exist. At that point, all assets will have no value. Does the certainty of our future non-existence as a species affect the price of any existing assets? No, because we have no information about when that certain event is likely to actually occur. So, the certainty of our future non-existence becomes part of the background uncertainty that does not affect current decision making because we have no information about it apart from its inevitability. Since we have no information about when it is likely to occur, it is not a risk differentiating one time period from another, so not part of current decision-making, so does not affect the price of any asset.

A point that applies to any particular asset class. Including items with transaction utility, but no consumption or production utility, which will inevitably cease to have transaction utility at some point, but whose timing we have no information about. Not even whether it will happen before all asset classes cease to have any future. Though it is clearly likely to be happen earlier, since much less has to happen for the event to occur. Hence I agree that the transaction utility of bitcoins in particular is weakly anchored, as remarkably little has to occur for them to lose transaction utility.

I also agree that reasoning on the basis of a regress can be very useful. It is why I don't think the concept of a "bubble" is very useful. If the turning points of "bubbles" could be reliably predicted, then bubbles would not occur, as no one would buy the asset at a price to be caught by the drop in price. Volatility in asset prices depends on the reality that turning points cannot be reliably predicted. But if you cannot predict the turning point, how can one usefully talk of a "bubble" beyond broad comments about asset price volatility?

But that regress depends on the implications of not having information. It is not a regress which turns out to require information before we actually have it.

(And if you think the above provides support for the Efficient-market Hypothesis [EMH], at least in its weak version, yep.)


[Cross-posted at Skepticlawyer.]

A feature, not a bug

Based on a comment I made here.

In the EU, lack of accountability is a feature, not a bug. If you claim that nationalism is the great problem of European history, and define nationalism as a popular passion, then blocking responsiveness to popular passion becomes "the solution". Which is nonsense, the great problem of European history is unaccountable power, not "nationalism" as such. Precisely which problem the European Central Bank (ECB) is demonstrating daily.

There is no information from the future: the decision irrelevance of background uncertainty

An expansion of comments I made here.

There is a certain sort of regress argument that David Glasner, following Earl Thompson, is fond of using. He uses it about the value of bitcoins here:

The problem I have is that bitcoins can’t be used for anything except as a means of payment for something else. Bitcoins provide no real service distinct from being a means of payment. Think about it; if a bitcoin can’t be used for anything except to be given to someone else in exchange, that means that someday, someone is going to be stuck holding a bitcoin with no one left to give it to in exchange. When that happens, that stinky bitcoin won’t be worth a plum (or plugged) nickel, or a red cent. It will be as worthless as a three-dollar bill.
Now I grant you that that final moment of clarity might not happen for a long time – maybe not even for a very long time. But if anything is certain, it is certain that, sooner or later, such a moment must certainly come. But if it is certain that ultimately no one will accept a bitcoin in exchange, then it follows that no one forseeing that inevitable outcome would accept a bitcoin in exchange prior to that moment unless he or she is confident that there is some sucker out there who will accept in the interim. But since when does a theory of asset valuation premised on the existence of an unlimited supply of suckers count as an acceptable theory? Under the normal rationality assumptions that economists like to use, it is not possible to rationalize a positive price for a bitcoin at any point in its history.

Against which, I invoke economist Frank Knight's distinction between risk and uncertainty and the fundamental principle of modern physics that there is no information from the future. Knight distinguished between risk, which was quantifiable (in some broad sense at least) and uncertainty, which was not:

Uncertainty must be taken in a sense radically distinct from the familiar notion of Risk, from which it has never been properly separated.... The essential fact is that 'risk' means in some cases a quantity susceptible of measurement, while at other times it is something distinctly not of this character; and there are far-reaching and crucial differences in the bearings of the phenomena depending on which of the two is really present and operating.... It will appear that a measurable uncertainty, or 'risk' proper, as we shall use the term, is so far different from an unmeasurable one that it is not in effect an uncertainty at all.

We live with lots of background uncertainty all the time. It is certain that homo sapiens will become extinct, that the polity I belong (and pay taxes) to will cease to exist, that the Earth will cease to exist. But we have no information about specifically when these things will happen. So, they are certain to happen, but when they will happen is completely uncertain. That is, they are part of the normal background uncertainty about the certain-to-happen.

If I have no information about when the certain-to-happen-sometime event will occur (not merely if, but when) then it is not a factor in current exchanges because it is not part of current expectations because there is no specific information for it to become part of current expectations. It is not a risk, because there is no information to quantify it. It is, at best, part of the aforementioned background uncertainty about irrelevant-for-current-decision-making certainties.

An example is the dollars of the Confederate States of America (C$).  As the probability of the Confederacy ceasing to be due to the increasing likelihood of the final victory of the United States of America increased, the (at least roughly quantifiable) risk of there being no one to trade with in C$ increased dramatically, hence the value of the C$ plummeted, the time held between transactions [-] fell towards 0 [and so the velocity, and thus] the price level towards infinity.  But there was information to base specific expectations on and the risk could be quantified (and clearly was).

To put it another way, the certainty of occurrence at some no-specific-information-about time does not, of itself, constitute a likelihood of occurrence within the frame in which current expectations are formed and decision calculations are made.

Which applies to all such "regress from certain to happen but-no-specific-information-about-when" arguments, not merely bitcoins. 

Sharia against success

When the muezzin calls the faithful to prayer, part of his call is "come to success" (Hayya ʿala 'l-falāḥ, literally "hasten to success"). The idea is that Islam leads to success in this world and the next. For the key problem in Islam is ignorance, and the answer to ignorance is guidance; specifically, the instructions given to Allah's guide (Muhammad) by Allah. In Islam, a prophet is a guide of God and Muhammad is the final guide, the seal of the prophets (Khātam an-Nabiyyīn, a title used in the Qur'an to refer to Muhammad, understood as the Prophet bearing the final revelations).

Hayya ʿala 'l-falāḥ ("hasten to success").

Thus Islam is submission to (the instructions of) Allah; i.e. becoming a Muslim, so a whole person, complete in one's submission. One becomes a Muslim by uttering the declaration of faith, the Shahada (literally, the witness or testimony of faith): There is no god but God, Muhammad is the messenger of God.

The words, actions and life of Muhammad are the key to the Qur'an and to following the correct path, which is Sharia (literally, the path or way). Sharia is structured inference from the words (including the revelations recorded in the Qur'an), actions and life of Muhammad, the Sunnah. It is hardly possible to have a purely Quranic Islam, since the Qur'an is not structured chronologically (either in chapters or in verses within chapters) and later verses abrogate earlier ones--so the life of Muhammad puts the verses in their necessary sequence and context--while the Qur'an itself says to follow the example of the Messenger, the last Guide.

Sharia jacket

Which is what Sharia provides: the correct and informed path built on structured inference from the Prophet's example. Sharia is not merely law, it covers manners, ethics, what you eat and when, ritual life. All based on inference from the words, actions and life of Muhammad. The events of his life are the cases and Sharia works as inference from them. (If you are interested in more detail on any of this, talks by Dr Rev. Mark Durie--Arabic linguist and Anglican vicar--provide a very accessible online resource: he blogs here.)

Sharia is not without its virtues. It provided a common set of laws from Morocco to Northern India and into the Malay world. For much of its existence, it was probably a superior set of commercial laws than that available elsewhere--this was part of its appeal in the Malay world, for example. Even today, in some circumstances, a woman can be better off getting a Sharia divorce than under the laws of England and Wales where, due to the Christian presumption of no-divorce, pre-nuptial agreements are not recognised. But Sharia also has some severe limitations. In particular, it is a major constraint, even barrier, to effective social bargaining.

What Western Europe and Japan had

In evolving higher levels of social activity and ability to mobilise resources through social bargaining, Western Europe and Japan shared certain advantages. Both had universal ethics (Christianity, Buddhism) which facilitated social bargaining. In both law was an entirely human thing. (Canon law was partly grounded in revelation and natural law, but it could be changed--even natural law was something of a moveable feast, as changes in Church teachings on slavery indicate--and did not trump secular law.) In both, single heir systems developed promoting concentrated inherited wealth and limiting the value of kin connections in social cooperation. Both were mountainous with lots of water transport, promoting factor (labour, capital) mobility and competitive jurisdictions. Both were isolated from conquering steppe nomads, so did not have their institutions flattened periodically.

Daimyo procession--a personage to bargain with.

Europe produced effective, responsive states able to mobilise resources far more effectively than any other civilisation. The result were enormously successful societies, for good and ill (mostly good for its own peoples, rather more mixed for their colonial conquests). This highly successful evolution ultimately produced prosperous, free and democratic societies. It also brought 1000 years of Muslim aggression against surrounding civilisations and cultures to a halt by evolving into much more successful social predators. Hence, European states began to roll back the Ottoman Empire out of Europe and came to occupy and dominate the Middle East from the early C19th to the mid C20th.

Japan was the civilisation who was institutionally most like Europe. In particular, it was the civilisation with the next highest level of social bargaining. It is not therefore surprising that it was the civilisation which was most effective in responding to the Western challenge.

That Islam didn't

Islam had none of these advantages. The Islamic world from Morocco to Northern India was either accessible to steppe conquerors or to eruptions by its own pastoralists, or both, so there was a persistent tendency to institutional "flattening". (Islam itself was made dominant in the region by just such a wave of pastoralist conquest.) The geography was open to imperial unification and generally militated against stable states with long institutional learning processes.

Mirza Abu Taleb Khan

While Islam looks like a universal ethic--and it is certainly universal in its purported coverage--it actually puts major divides between people. Men have superior legal standing to women, believers over non-believers. (A non-believer could not testify against a believer, for example.) Moreover, any social bargain not compatible with the life and example of Muhammad was incompatible with Islam. (And still is.) For, in Islam, law is not a human thing; it is a religious, a divine thing. This hugely constrains its ability to support or ratify social bargains, just as the differential treatment based on religiously allocated status undermines the very notion of social bargaining across such barriers. Even without the issues of permitted deception or taqiyya and kitman.

Between 1798 and 1803 the "Persian Prince", Mizra Abu Taleb Khan (1752-1806?), an Indian of Perso-Turkish background, travelled to Europe and wrote down his impressions in a travel memoir, which was translated in the early C19th in two volumes by Charles Stewart (1764-1837). In the second volume (published in 1814), Taleb Khan wrote:

Even the laws respecting culprits are abrogated or altered by Parliament; for the Christians, contrary to the systems of the Jews and Mohammedans, do not acknowledge to have received any laws respecting temporal matters from Heaven, but take upon themselves to make such regulations as the exigencies of the time require (p.81).

Taleb Khan admired much about British government (though the court system more in its theory than its practice), but he clearly finds this making laws rather strange. Earlier he wrote (and in both passages the touch of the translator can be discerned):

It is requisite to explain to Mohammedans that, in England, Law and Religion are distinct branches; and that the duty of the clergyman is limited to watching over the moral and spiritual conduct of his flock, to burying the dead, visiting the dying, uniting persons in marriage and christening children; for, according to their tenets, children are born without religion and, until christened, are not admitted to the pale of the Church (Pp63-64).

Sharia mandates division among heirs, undermining the development of powerful propertied families. In particular, in medieval Islam, the warrior elite was not given land (ownership) grants--which would have to be divided upon inheritance, and so become too small to support a (seriously expensive) mounted, armoured warrior--but tax grants (iqta, timar, tuyul, jagir) which, as public functions, were not subject to Sharia inheritance provisions. (They are often described as "land grants", but that is misleading.) Such tax grants also greatly narrowed both the warrior elite's connection to the productivity of the land, including productive relations with the peasants, and the scope and motive for social bargaining. The different effects between land-owning warriors and tax-collecting warriors was observed by Muslim observer ibn Jubayr (1145-1217) as long ago as the C12th:

Upon leaving Tibin (near Tyre), we passed through an unbroken skein of farms and villages whose lands were efficiently cultivated. The inhabitants were all Muslims, but they live in comfort with the Franj [Franks, i.e. Crusaders]—may God preserve us from temptation! Their dwellings belong to them and all their property is unmolested. All the regions controlled by the Franj in Syria [Everything south of Anatolia and west of Mesopotamia up to Egypt] are subject to this same system: the landed domains, villages, and farms have remained in the hands of the Muslims. Now, doubt invests the heart of a great number of these men when they compare their lots to that of their brothers living in Muslim territory. Indeed, the latter suffer from the injustice of their coreligionists, whereas the Franj act with equity.

Centuries of such difference lead to very different social outcomes. That Western rulers had to bargain with powerful landed warrior dynasties and organised merchants made even more of a difference to social outcomes. There was no development of Parliamentarianism in Islam. Even if there had been reasons to engage in such bargaining assemblies, they would have had no competence to make legal changes.

It is possible to talk about Islam's inadvertent patterns precisely because Sharia has been such a powerful and consistent social constraint. Even when it is not the actual legal system in use (as it was for over a thousand years), and even though religious belief can be something of a moveable feast, Sharia powerfully influences enduring cultural patterns among Muslims, even to their social psychology.

Social bargains

There was nothing in Latin Christianity which blocked broad social bargains (at least among Christians) and much which facilitated it. The blocking of cousin marriage (see Fourth Lateran Council 1215, Canon 50 which cut it back to merely 4 degrees) undermined kin connections as tools for social cooperation, encouraging use of broader social bargains; the universal ethics facilitated broad social bargaining; and the view of law as a human thing permitted both legal experimentation and law reflecting and enforcing social bargains. Out of these processes of social bargaining (and intensely bellicose inter-state competition) emerged highly effective and socially responsive states.

No agreement reached here can change the laws.

Conversely, Islam put up a wide range of blocks to broad social bargains. The permitting of cousin marriage encouraged reliance on kin connections for social cooperation rather than broader social bargaining; the requirement to divide property among heirs undermined creating powerful propertied interests as long-term social bargainers; the ethical structure deeply divided people by faith and gender; the notion of law as divine and based on the life of a single C7th religious-political figure blocked it being used for either legal experimentation or reflecting and enforcing social bargains. Shura, consultation has positive standing within Islam, but such assemblies had no competence to change the law. Islam was not going to (and did not) evolve Parliamentarism, that is a Western import.

So Islam fell behind and now confronts a world dominated by infidel success. Something that is a great source of Muslim rage, as (the greatest) success in this world and the next is the prerogative of those who submit to the guidance of Allah through His Prophet.

Democracy and Islam

On the other hand, polls suggest that Muslims strongly or even overwhelmingly wish to live in democratic societies, the most extensive of broad social bargaining polities. Muslims have proved them willing to, en masse, defy threats to participate in elections. But democracy both grew out of, and operates on the basis of, broad social bargaining. Islam sets up all sorts of barriers to such social bargains. And the more you go back to the source material, the more you bind yourself to the C7th example, the more that is so. Hence the jihadi claim that democracy is blasphemous.

The jihadis are would-be reformers of Islam at war with its modernisers, a pattern that goes right back to the early days of the Abbasid Caliphate and the struggle between the Mu'tzallites and the (victorious) Ash'arites. The long-term pattern of Islam is depressingly clear--the reformers always end up defeating the modernisers, with the source materials of Islam being much more on the side of the former.

Given that the logic of belief is not necessarily the logic of believers, it is much easier to have Muslims who choose to be democrats than a democratic Islam. That is a profound dilemma and the greatest delusion of all is to suggest that the dilemma is not real, is not powerful, is not a force in the world today and for the foreseeable future.

[Cross-posted at Skepticlawyer.]

Things you find: TV News as it is done again and again

Something to finish off your weekend, an oldie but a goodie:

The tumblr post I got this from suggested it is how the BBC reports, well, everything.

[As per normal, cross-posted at Skepticlawyer.]

Austrians and Marxists are wrong about the state

In 1718, after admiring how orderly his recently conquered province of Livonia was, Peter the Great (r.1682-1725) commanded an enquiry into how this was so. The enquiry found that the Swedish crown had spent as much administering Livonia as Peter spent administering the entire rest of the Russian Empire. Peter promptly dismantled the provincial administration.

In 1800, the United Kingdom (population under 20m) had the same number of government officials (pdf) as Qing China (population over 300m). The British central government extracted around four times the revenue (pdf) the Qing central government received, and did so from an economy about a sixth the size of the Chinese economy.

How so?

The social bargaining state

The British state deeply penetrated society, as did society the state. Britain was famously a Parliamentary state, constructed on high levels of social bargaining. In this continual process of social bargaining, the British state was able to extract far more resources from its society as a trade-off for providing far more benefits. The British state was therefore much more responsive to its society, providing a far greater range and level of public goods--the British state probably spent as much on the Poor Law as the Qing state spent on the equivalent (famine relief). In particular, the sale of British government bonds meant that private interests had a serious stake in the viability and success of the state. An arrangement that was both based on, and led to, high levels of information flow between state and society.

In early C19th Qing Empire, one county magistrate administered, on average, 300,000 people.

Conversely, the Qing state relied entirely on command-and-control mechanisms, with any social bargaining being of an extremely passive variety. Chinese law was designed to minimise recourse to the courts, with families and associations left to manage their own affairs. The Qing state had effectively no capacity to borrow, relying on the build up of silver reserves to deal with emergency financing needs. Its financial resources were limited to past and present revenues. Conversely, the British state, with its capacity to borrow, was not constrained by past or present revenues but could raise money from future income (pdf):

Britain’s debt rose with only a few peacetime pauses to 215 per cent of national income in 1784. After a brief peacetime decline in the following decade, it rose again to 222 per cent of national income in 1815 and reached a peak of 268 percent in 1821, ...

... between 1760 and 1860 Britain’s it was never lower than 100 per cent and from approximately 1780 to 1845, never lower than 150 per cent of GDP.

If the income of the British central government was around 15% of GDP (it likely peaked at around 20% of GDP in the Napoleonic wars and was still above 10% in 1850), that would make its debt never lower than 10 times its income in this period--by comparison, the current US federal government debt is around 5 times its income.

The command-and-control passive-social-bargaining-only Qing central government extracted about 3.4 grams of silver per head of population. The actively social bargaining state-and-society-penetrate-each-other British central government extracted about 304 grams of silver per head of population. In other words, 90 times as much silver-equivalent per head--hence receiving four times the revenue (in silver) from an economy less than a sixth the size. Yet it was the Qing government, not the British, which was regularly rocked by massive popular revolts.

British politics--noisy, public and clubbable.

So, when the two states went to war in the Anglo-Chinese War, the first of the Opium Wars, the Qing Empire was going to war with a state that had better military technology, better military organisation, over four times its income and great capacity to borrow funds. It was not going to end well (for the Qing). Despite the fact the Qing Empire's economy was around six times as large with maybe 18 times the population (around 21m to 380m).

The states that developed in Europe, particularly Northwestern Europe, were dramatically different in their evolution and outcomes than the states that developed elsewhere. Trying to develop a typology of the state based on European experience is to normalise the profoundly exotic. This is not a good place from which to base analysis. Even given that the process of colonisation and emulation spread practices and techniques of European state across the globe.

This (relatively) new thing

The state is a relatively new feature of human society. The first states grew out of chiefdoms a few thousand years ago. As recently as the early C19th, much of the world's land area was not under the control (nominal or otherwise) of any state. Scrolling through the online TimeMaps historical atlas is a useful reminder of how part of the processes of history have been the expansion in the coverage of states. (The maps exclude the steppe polities, but they could reasonably be regarded as chiefdoms rather than states.)

Which also brings to mind how little stateless societies have achieved. A few basic inventions--fire, wheel-and-axle, farming, herding--but little else. Sure, they were the basic inventions on which the rest of human history has been built, but the overwhelming bulk of human achievement has been within state societies.

Starting with the fact that they are a lot safer to live in. Even given the horrendous killing records of modern states. State and non-state societies may have roughly similar range of homicide rates (pdf), but add in deaths from war, and state societies have much lower death-by-violence rates. It seems that on simple don't-end-up-violently-dead grounds, Hobbes's Leviathan is worth having. Especially as a lack of states does not mean a lack of war; it just means war becomes a much more immediate and common experience.

The paradox of rulership

The paradox of politics--we need the state to protect us from social predators but the state is the most dangerous of all social predators--does indeed operate. Actually, we should really call it the paradox of rulership, since it begins to operate before actual states are achieved.

With lower levels of social predation, higher levels of social achievement are possible. In order for chiefdoms to become states, a certain level of population concentration and production is required. Indeed, a constant part of the story of the state from its origins onwards is its attempts to remould society so that it can be supported. In doing so, it seeks to raise the level of social activity. Hence the connection between state societies and human achievement.

Which is where both Marxism and Austrian school economics tend to go wrong about the state. They wish to draw a sharp moral distinction between state and society based on presumptions of causation. The natural tendency of the Austrians is to adopt the principle that human achievement is born in society without, even against, the state. Their principle is that human society is so great, that the state deforms it. But this is far too simplistic a conception. Again and again, the achievements they point to are profoundly based on the public goods provided by the state. And the prosperous liberal capitalist societies they extol were achieved in societies where state and society interpenetrated each other more profoundly than any other societies in human history up to that time. The Austrians keep wanting to leave the state out of (positive) historical causal processes when it was intimately, and necessarily, involved in them.

The natural tendency of Marxism is the reverse: hardly surprising, in many ways Marxism and Austrian school economics are mirror images of each other.  The natural tendency of Marxism is to hold that society is so flawed, that (only) the state can redeem it. But the state is not some epiphenomenon of social processes. State and society mutually create each other. An unequal and exploitative society has been created by, and created, its state.

Indeed, given the role of the state as dominant coercive power, the state will be the biggest force in moulding the society. But, in any decent society, it is a process of mutual creation; the notion that the state is socially omnipotent, that it can create any society with any characteristics it wants, is simply not true. Not least because the state is not, and cannot be, omniscient. Crucial to how state and societies operate is the information flows between them. Here the Austrians were spot on--the economic calculation problem will, in the end, defeat any such grandiose ambitions of state-as-society.

The scale of information flows were why the states of Northwestern Europe were so spectacularly successful. State and society interpenetrated each other, allowing high levels of information flows between them, and for state and society to tend to support and increase, rather than crush, the operation of the other. In particular, social bargaining led to more capital leading to more economic activity and more social bargaining leading to more revenue for states.

Mutual needs

Simple minded cheerleading--society good!, state bad! versus society bad!, state good!--is historical nonsense. We remain necessarily enmeshed in the paradox of politics. The notion that the paradox can be "solved"--either by creating a naturally just state or by dispensing with the state altogether--is delusory.

Of the two delusions, belief in a state which can transcend the paradox of politics is by far the more dangerous. For that project is profoundly and naturally tyrannical. To create the entirely just society, the state has to have enormous power. And if it is on the business of final justice, its actions are inherently absolutely worthy. This utopian project both expands the state to fill up any social space and justifies its power to crush any social dissent (as it defines it). It does not stop the state being predatory, it just turns it into the ultimate social predator. With C. S. Lewis's warning being absolutely apposite:

Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.

Later re-run as commissars and gauleiters.

Conversely, belief that all will be so much better if we do without the state--as long as the belief is not prosecuted by acts of violence--merely encourages suspicion of the most dangerous social predator. A certain amount of that is just good sense. There is nothing in any of this which guarantees all state actions will have positive social consequences.

Indeed, the bootleggers and Baptists phenomenon reminds of how the state generates bootleggers. Just as those who complain about "developers" rarely pay any attention to how, for example, government approval processes squeeze out small developers (who are much less able to handle approval delay risks) thereby generating the housing industry dominance of well-connected large developers who then game the system. Like the rest of us, public policy operates in a world of unintended consequences. The state is not an epiphenomenon of society; it moulds the society, which then moulds it.

We live in the world of the paradox of politics where state and society create each other. The blessing is to be the heirs of a social evolution of an ever-widening spiral of social bargaining which ended up with universal suffrage and elections that matter. With states that, for all their moral limitations, are remarkably responsive and support--indeed, significantly create--societies of great openness, freedom and prosperity.

[Cross-posted at Skepticlawyer.]

That exporting revolution business

Afghanistan successfully held provincial and first-round presidential elections. Various folk are in the running for President. Part of building a viable democracy is building the habit of elections and change-through-elections. Since the incumbent is barred from running again (two-term limit), a new President must result. 

Afghan women register to vote.

The high turnout is encouraging, especially as the Taliban threatened to disrupt the election, and there were some killings. But more is required for a free political outcome than elections: a viable democracy requires a viable state which requires lots of day-to-day habits and expectations. Still, having a high turnout election successfully conducted is a positive sign, just not a definitive one. 

As an aside, we tend to forget that the US is a revolutionary state. It has proved to be still willing, if sufficiently provoked, to fight to export its revolution. Always an inherently tricky matter. One could argue, after all, that the late Soviet Empire's attempt to export its revolution managed, in the longer run, to actually export the American one. Not what was intended ...

[Cross-posted at Skepticlawyer.]

First they came for the pagans and the queers

The upside of Mozilla's purging of Brendan Eich is various folk are getting the point that penalising opinion and purging workplaces is so not a good idea.

The downside is a lot of folk just don't get the bigger issue. This piece, for example, First They Came For The Mormons, exemplifies the common notion that "this" started with gay activists or modern progressivism, or whatever. This post mostly gets the bigger issue, the comments below mostly do not.

An old, traditional pattern
No, this is not a "new" thing, moral exclusion started much earlier and is deeply entwined with the Judaeo-Christian tradition. What happened to Brendan Eich is actually a relatively mild version of what was done to queer folk for centuries. The habit for much of the C20th, for example, of whenever bars catering for a queer clientele were raided, having all those apprehended listed in newspaper reports was exactly the same as finding out who contributed to the Proposition 8 campaign and then targeting them. (Ugandan newspapers are continuing that inglorious tradition.)

It is the modern, scaled-down, version of the theology of Deuteronomy 13. Deuteronomy 13 enjoins the killing of those who have wrong beliefs--i.e. worshipping pagan gods:

If your very own brother, or your son or daughter, or the wife you love, or your closest friend secretly entices you, saying, “Let us go and worship other gods” (gods that neither you nor your ancestors have known, 7 gods of the peoples around you, whether near or far, from one end of the land to the other), 8 do not yield to them or listen to them. Show them no pity. Do not spare them or shield them. 9 You must certainly put them to death. Your hand must be the first in putting them to death, and then the hands of all the people. 10 Stone them to death, because they tried to turn you away from the Lord your God, who brought you out of Egypt, out of the land of slavery. 11 Then all Israel will hear and be afraid, and no one among you will do such an evil thing again.

Thoughtcrime was Biblical long before George Orwell. Purifying society by purifying public belief by outcasting the wrong-thinker is entirely Biblical.

The Christian right's social model
And enforcing social conformity by boycotts and outcasting is entirely something the Christian right perfected long before the Brendan Eich case. There is a long history of Christian boycotts targeting the (extremely vulnerable) queer minority and those who stood up for them. The attempts to block TV shows and plays that dared to present them positively. To block openly employing them. To block any form of legal protection. Declaring permitting access to the ordinary amenities of life to be "promoting homosexuality".

It cannot be said often enough: the purging of Brendan Eich is the Christian right's social model in operation. The notion that you can cut a group out from the herd and deny them ordinary amenities of life is precisely what the Christian right did, attempted to do and continues to demand the right to do. When Scalia J wrote from the bench of US Supreme Court that "Americans" should be entitled to show their "disapproval" of "homosexual conduct":

Of course it is our moral heritage that one should not hate any human being or class of human beings. But I had thought that one could consider certain conduct reprehensible–murder, for example, or polygamy, or cruelty to animals–and could exhibit even ‘animus’ toward such conduct. Surely that is the only sort of ‘animus’ at issue here: moral disapproval of homosexual conduct, the same sort of moral disapproval that produced the centuries old criminal laws that we held constitutional in Bowers.

he was endorsing the practice (though not the direction of the targeting) that the purging of Brendsan Eich represents. Being denied ordinary amenities for failing to conform is exactly what was meant in the above passage (except the doers and target has changed); expressing moral disapproval for conduct is what has now been done to Brendan Eich, and was done to queer folk for generations.

Those who see this purging as somehow something new, or a speciality of the left, are, at best, ignorant of this Christian history of boycotting and denial of ordinary amenities of life to enforce conformity; so that they literally do not see that it is precisely what the Christian right wanted and did and still seeks the right to do. For part of moral exclusion is an impoverished epistemology; the notion that what happens to the morally excluded literally does not count. That what was done to the queers has no implication for "real" people.

But there are no "proper" and "improper" persons, nor are there any "do not count" folk who are different from "real" people so that what happens to them has no implications for "real" people. What happens to any group counts, because it is a model that can be used against others--any others.

There is a deep sense of entitlement here--that people like us are entitled to do this to "them" but no-one is entitled to do it to people like us. Sorry, that sense of entitlement is entirely in your head and it will be taken over (and inflicted on) whomever has enough social power, and feels sufficiently entitled, to do it too.

There is, of course, a notion operating that traditional outcasting is somehow different. But that is simply a persistent flaw in conservative thinking--by valorising the past, one is blinded to inconvenient aspects of it. Yes, queers did have this experience and yes it did count. Both in itself and in providing a model for others to follow. The historical, very traditional, chickens are coming home to roost.

Fetishes of order
Which leads to another persistent flaw in conservative thinking--creating fetishes of order which are in fact causes of disorder. In the late 1920s and 1930s, a fetish of order which was a (disastrous) creator of (economic, then social then political) disorder was the gold standard. Nowadays, narrow inflation targeting performs the same role--a fetish of order which is a creator of (pdf) (economic) disorder.

The denouncing of homosexuality and homosexual pairing is also a fetish of order which creates social disorder. It tears apart families, leads to youth suicide and other self-destructive behaviour; when reflected in law, makes people vulnerable to blackmail and strips them of legal protections (as going to be police over any crime becomes so fraught), makes them vulnerable to criminal exploitation; makes building stable relationships harder. But you only notice this if the experience of queer folk counts; experience (and aspirations) which moral exclusion excludes from counting in its impoverished epistemology.

Acts above people
A moral exclusion which puts acts above people. Christ spends much of the Gospels criticising acts-based religious authority. Catholic, Orthodox and other Christian priests and clerics quarantine that by claiming Christ that was just attacking Jewish religious authority--the well-known blame the Jews move. And then promptly contradict that quarantine by saying that (the rest) of Christ's teaching was for everyone.

Let's not engage in the blame-the-Jews quarantining of the inconvenient past. This is all an excellent lesson in the power of the Gospel teaching--don't focus on acts and fail to see the person. In particular do not fail to see them as a person, as an object of moral concern and protection, just like you. Which means listening to their experience and aspirations as you would want to be listened to. Which means permitting them access to the ordinary amenities of life as you would want access. Do as you would be done by. Love thy neighbour as thyself. Do not delude yourself that there is someone or some group out there who can be stripped of moral standing and protections, and access to the ordinary amenities of life, and yet this has no implications for you and yours.

A delusion which the Christian right has bought into for decades and the progressive left is doing now. Asterisked Christianity as its own reward.

Repeatable patterns
There is a certain amount of velvet rage in the purging of Eich. A cry of rage and pain over past and present miseries. Understandable but not helpful.  Well, perhaps a helpful moral lesson but not in the sense the purgers intend.

Brendan Eich apparently also donated to folk such as Patrick Buchanan, who said that:

... our promiscuous homosexuals appear literally hell-bent on Satanism and suicide ...

... homosexuals have declared war on nature, and now nature is exacting an awful retribution ...

That expressing of moral disapproval for homosexual conduct Scalia J that judicially opined is just fine. Eich also donated to the cause of denying queer folk access to ordinary amenities of life (i.e. marriage). Well, having a career is an ordinary amenity of life too. And folk have expressed their moral disapproval for Eich's anti-equality-before-the-law conduct. For his failure to successfully recant as, say, Hillary Clinton has done.

But recantation of their homosexuality and homosexual conduct is precisely what was and is demanded by the Christian right of homosexual folk. Which is yet another way in which queer-hatred is like Jew-hatred: making an utterly unreasonable demand (give up your sexual nature, give up your religion) as a requirement for full moral standing and equal protection of the law. Along with pretending it is not hatred, it is just "moral concern".

The velvet rage is understandable, as the "moral disapproval" of homosexuality still tears apart families and ruins lives. But however useful the moral lesson from the Eich case that the moral exclusion beloved of the Christian right is a force for social disorder--not merely for queer folk, but by providing an example for anyone to use--it is still not a path to take.

The Jewish roots of homicidal purification
For we should remember that the Holocaust had Jewish roots. The notion that society is rightfully purified by blood and fire destroying a corrupting and perverse minority was part of Catholic and Orthodox teaching for generations: that was (and remains) the mainstream Christian reading of Genesis 19, the story of Sodom and Gomorrah. Rather than the traditional rabbinical reading that the cities of the plain were destroyed for withdrawing moral protection from the vulnerable--indeed, were so anti-moral that they punished those who protected the vulnerable.

And from whom did Christians learn to read Genesis 19 as moral purification by slaughter of a vulnerable minority? From Jewish natural law philosopher Philo of Alexandria, in On Abraham: XXVI-XXVII and Special Laws III:VII.

Now, I am sure God-fearing family man Philo had no inkling that this notion that society was purified by slaughtering a corrupting and perverse minority had any implication for folk such as him; that homicidal denunciation of pagan degenerate queers had no implication for "right-thinking" and "right-acting" folk. But, of course it did. Because one person's proper thought and conduct is another person's corruption and perversion. The constant iteration by the Church down the centuries of Philo's notion of moral cleansing by slaughter of a targeted "corrupting" and "perverse" minority very much had implications for folk such as him, as centuries of Christian pogroms proved.

A notion of moral-cleansing-by-slaughter that the Catholic Church happily took up as a tool of preaching; endorsing (and, where they had temporal power) practicing "purifying" judicial murder of corrupt and perverse sexual actors and corrupt and perverse thinkers. Indeed, happily spreading the idea, in a compilation compiled by a (later beatified, mainly for doing so) prince of the Church, that Christ insisted on having all the sodomites killed--purifying the world--so that the Incarnation could happen. The Gospels as born in purifying massacre.

All leading up to the greatest pogrom, the starkest purifying massacre of all, the Holocaust. (Though the slaughters of Leninism also come from this root.) If you constantly preach that some vulnerable minority is corrupting, perverse and against God; if you preach that God endorsed purifying slaughter of such a minority, then there will be consequences. Not least because you also set up and inculcate the example for others to follow.

Just as pro-gay-rights folk are practising the outcasting that the Christian right has so long practised and still endorses. The Christian right that set up the example for others to follow.

And now really does not like the consequences. However tempting it might be to say "tough", stew in the social juices you prepared, it is still not the way to go. Because moral exclusion is a moveable feast, a social game anyone can play, if they have the power.

Let's not (also) go there
A game that does, as has been pointed out, greatly increases the cost of losing social struggles. Part of the civility of a good society is to not make politics mean that much, to have such profound implications. Nor religion, for that matter.

Yes, the sense of righteous entitlement involved is intoxicating. Yes, it is great to be a gatekeeper of righteous, enforcing a moral gulf between correct and incorrect acts and beliefs.

Philo's natural law reworking of Genesis 19 had such appeal precisely because if sexual acts mattered so much that God would destroy entire cities over them, then you really had to listen to the priest and clerics as they led you through the divinely ordered moral universe of correct and incorrect acts and beliefs. To be pharisaical in the sense that Christ denounced is to be a needed source of entitled authority. Which, like other aspects of Judaeo-Christian belief and practice, can be happily secularised.

But the real lesson in rejecting the entitled moral bullying and outcasting of the Christian right is not to practice some "new improved" version for oneself--to take you your own sense of entitlement--but not to practise it at all. Yes, stand up for people's rights, support equal protection of the law, but not as a new litany of "correct" and "incorrect" acts and beliefs, but because you do morally see the person, even when they do not morally see other people; do so even when, in some ways especially when, they are wrong.

To buy into error having no rights is to buy into the social tyranny of whoever has the power to deem what is right. A free society means having the liberty to be wrong. Just because the Christian right persistently refuses to grant that, does not mean the rest of us should not.

Boycotts work through social power. Part of the conservative outrage over the Eich case is the display of pro-queer social power and the evidence of the loss of anti-queer social power. A profound sense of moral entitlement encased in a fading sense of social significance is not a pretty sight.

Even so, social might does not equal moral right. The conservative Christian attempt to deny access to the ordinary amenities of social life was and is not right, and neither is the reverse.


ADDENDA: Some grammatical infelicities have been fixed since the original posting.
[Cross-posted at Skepticlawyer.]