Institutions and Things

Selznick (1949, etc.) defines an institution* as something that has been infused with value beyond its rational purpose. We usually talk about institutions with respect to organizations or practices – arguing, for example, that the TVA had become institutionalized because its employees, beneficiaries, etc. actually gave a shit about what happened to it as the TVA. We can think of all sorts of organizations that have this feature – my high school, for example, universities, states, etc. I was thinking about the definition today because I was packing all my worldly belongings in the process of moving and I noticed that I took much, much more care with a small subset of things than I did with the rest. Playstation 2? Throw it in a box. The Super Nintendo? Wrap it lovingly, making sure each game is safe. So, I thought I’d write up a brief list of the things that are most institutionalized for me**. This post is oddly personal, so feel free to skip it if you don’t like reading that sort of thing.

Random Theory Thought of the Day

Bourdieu treats agents as (micro) structures.
Latour treats structures as (networks of) agents.

The Breakdown of the Capital-Labor Accord and Okun’s Law

I’ve been thinking a lot lately about the periodization of recent history and its connection to economic theory. In particular, in economic sociology we talk a lot about the “post-war capital-labor accord” and the golden age of the 1940s-1970s. In these years, inequality went down, unions flourished, civil rights laws were passed along with LBJ’s Great Society programs like Medicare, etc. Corporations saw themselves as not just profit-seeking nexuses-of-contracts but also as institutions with duties to their stakeholders – employees, local community organizations, etc.

Then everything went to hell in the 1970s. Oil shocks, poor economic performance, large increases in foreign competition, an overheated economy created by the meeting of increased social spending and increased military spending, all combined to create massive inflation and other sorts of economic upheaval. The shooting war between labor and big business resumed, as union contracts were blamed for causing inflation and big business began to push for regulatory changes (to fight the hated EPA and OSHA, along with unions) and increased layoffs. Institutional investors, growing rapidly in size in part *because* of the prosperity of the “golden age” (e.g. the massive pension funds like CALPERS and TIAA-CREF), began to demand discipline from corporations unused to having to listen to anyone (cf. Berle and Means 1932, Useem 1996). Changes in financial regulations and institutions made possible the junk bond market and, in turn, a more active market for corporate control – suddenly, large firms that were used to making acquisitions became targets.

The Rise and (Non)Demise of Economics as a Study in the Sociology of Knowledge

This week’s economist has a three part feature on What went wrong with economics?*. The first part discusses in general how financial economics and macroeconomics have both been blamed for helping to create the current economic crisis, failing to see the crisis coming, and failing to provide useful solutions once the crisis hit. The second part examines the history and sate of macroeconomics, focusing on recent debates involving eminent econobloggers Brad DeLong, Paul Krugman, Greg Mankiw and others. Part three traces the history of financial economics, including the efficient markets hypothesis and the various models used to evaluate risky assets. The overall angle of the piece is to ask the title question – what went wrong? – and to speculate about where economics will go from here. In this post I’m going to make a few comments on various parts of the series, and try to use economics as an example to show why the old school sociology of knowledge divisions about knowledge being a mere reflection of the world or a totally independent causal force don’t make a lot of sense, at least when it comes to economics**.

Borges the Blogger

Recently, Daniel Little over at Understanding Society posted some comments about Malthus as a blogger, e.g.:

I think that Thomas Malthus would have been very much at home in the blogosphere. He weighed in on the issues of the day, bringing careful logical analysis of economic theory to bear on the policy issues that were up for debate. And he was very interested in making the connection between economic principles and real empirical evidence.

Leaving aside for the moment whether or not that is an accurate description of the econoblogosphere*, Little’s discussion got me thinking about what other historical figures would have thrived in the crazy world of blogs.

And then an answer came to me: Jorge Luis Borges. Borges was an Argentine author of short stories and poetry whose work made constant reference to intertextuality (the idea that the meaning of a text is always in dialogue with the meaning of other texts, and only interpretable as such) and other post-modern ideas (like the arbitrariness of categorization, the relationship between descriptions of the world and the world itself, or the non-linearity of time and space). The connection between Borges’ ideas and the World Wide Web was noted early (for example, implementations of his heavily-footnoted “story-essays” in HTML felt very natural, like this one). But I think blogging is a medium even more suited to Borges than just the web. If we think of the world of blogs as a constant, tumultuous conversation between distant others, taking the form of short, pointed posts wavering between screed and academic inquiry, I think Borges fits in neatly.

For example, can’t you just imagine a Borgesian short story blog where each post was an independent story but which held together via self-reference and repeated themes to form a (constantly shifting) whole? An example, my favorite one paragraph Borges story:

On Exactitude in Science
… In that Empire, the Art of Cartography attained such Perfection that the map of a single Province occupied the entirety of a City, and the map of the Empire, the entirety of a Province. In time, those Unconscionable Maps no longer satisfied, and the Cartographers Guilds struck a Map of the Empire whose size was that of the Empire, and which coincided point for point with it. The following Generations, who were not so fond of the Study of Cartography as their Forebears had been, saw that that vast Map was Useless, and not without some Pitilessness was it, that they delivered it up to the Inclemencies of Sun and Winters. In the Deserts of the West, still today, there are Tattered Ruins of that Map, inhabited by Animals and Beggars; in all the Land there is no other Relic of the Disciplines of Geography.

Suarez Miranda,Viajes de varones prudentes, Libro IV,Cap. XLV, Lerida, 1658

To summarize: I wonder what a modern Borgesian blog would look like, and I wager it would feel quite like the original**.

* A word I would describe as “clumsy and random” but which seems unlikely to go away soon.
** Not that Borges would have wanted anything to “feel like the original”, for what is an original but the first imperfect copy of an impossible form? See, for example, Chibka’s essay Borges’ Library of the Forking Paths, about how the various publications of the Garden of the Forking Paths contain slightly different citations. A gift, and a challenge, from Borges, to his inquisitive and excessively desirous of consistency public.

Accounts! Summer Edition

The new edition of Accounts (the ASA Economic Sociology Section newsletter) is out, and available here. This issue is the last under our editorship at Michigan. I highly recommend it.

Features:
Two essays providing historical perspectives on the financial crisis, by Greta Krippner (Michigan) and John Bellamy Foster (Oregon).
A review of Richard Posner’s A Failure of Capitalism by Accounts editor Lotus Seeley.
A report on a recent conference on “The Cultural Wealth of Nations” hosted by Nina Bandelj (UC-Irvine) and Fred Wherry (Michigan).

There’s also some ASA-related content and election results. Check it out!

All Hail Committee Member Freese!

In honor of Jeremy Freese’s election to the prestigious and powerful Committee on Publications, I am eliminating the city of publication from the Accounts newsletter book reviews (Look for a new issue next week, featuring excellent essays by Greta Krippner and John Bellamy Foster). Also, I don’t feel like looking for it.

Hip hip hooray!

5th6th Annual ASA Blogger Party!

Scatterplot has the scoop, and I imagine most of you have seen it there. If not:

Johnny Foley’s Irish House
243 O’Farrell Street, San Francisco, CA
Sunday, August 9
6pm

See you all in SF!

Brad “Oh Snap!” DeLong on Greg Mankiw on Unemployment Forecasts

There’s been a lot of subtle dissing in the econ-blog world lately. My favorite is the back and forth between J. Bradford DeLong and N. Gregory Mankiw’s favorite economist, N. Gregory Mankiw*. So, the back-story is that Mankiw keeps posting graphs showing the unemployment forecast published in the beginning of the year by Romer (CEA chair) and Bernstein (economic advisor to the VP) as part of the push to pass the stimulus, and comparing it to the actual unemployment numbers. Here’s the latest such post, and here’s the graph.

Mankiw’s implication? The recovery package is failing (or at least not working as promised), and the Obama administration is failing to admit it.

Of course, Mankiw knows a few things about the politics of presidential macroeconomic forecasts. In particular, Mankiw was chair of the CEA himself from 2003 to 2005. And Brad DeLong has a few issues with Mankiw’s own forecasts. In particular, DeLong notes that the CEA inexplicably lowered its forecasted growth in productivity to arithmetically force a higher predicted labor force (i.e. less unemployment). Here’s the relevant chart:

And here is DeLong’s analysis:

But assuming a 1.8% labor productivity growth rate at the start of 2004 would have meant that the forecast average level of employment in Tqble 3.1 for 2004 would have been lower than the level of employment when Bush took office, and that would have created a point of political vulnerability. There were two ways to fix this that would have satisfied White House Media Affairs: (i) reformat the table so that it no longer reports an annual average payroll employment number, or (ii) push assumed labor productivity growth down because if you keep GDP the same but reduce labor productivity arithmetic forces your forecast to produce higher employment.

Why the Bush CEA didn’t pick option (i) is something I have never understood…

Oh Snap! Your move, Mankiw.

* I’m not saying, I’m just saying. Also, less fun note, I bought two intermediate macroeconomics texts to read this summer: DeLong’s and Mankiw’s. I know, I lead a thrilling life.

Quiggin on Rat Choice

Anyone who likes my blog should at least check out Australian economist John Quiggin of Crooked Timber fame. Often, I find his posts contain well-phrased gems of things I’ve spent years not finding the right words for. Today’s brief CT post on economic imperialism (i.e. the rational choice craze in Political Science and Sociology) has an excellent example:

First, most rational actor models assume that “rationality” can be represented as “maximization of self-interest”. This assumption is either false or vacuous. Those committed to egoistic rationality tend, when challenged, to oscillate between the two definitions, in much the manner of the function sin (1/x) as x approaches zero.

Oh, snap!