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CONDITION: End of Semester:

And every single academic committee must hold its meeting RIGHT NOW!
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FIRST: John Quiggin on the End of Neoliberalism:

Rough beasts slouching towards an industrial utopia, by Stable Diffusion via NightCafe


Very flattering to get such attention:

John Quiggin: The slow demise of neoliberalism: How the all-conquering movement contained the seeds 
of its own destruction'. a€~DeLong personifies the schools of thought within the capitalist world 
as being those of Hayek (a€oeThe market giveth, the market taketh away; blessed be the name of the 
marketa€D) and Karl Polanyi (The
market was made for man, not man for the market)a€!. While Hayek opposed all forms of government 
intervention in the economy as a a€oeroad to serfdom,a€D Polanyi argued that people a€oehad rights 
to a community that gave them support, to an income that gave them the resources they deserved, to 
economic stability that gave them
consistent work.a€D Within this schema, the decades following 1945 (Les Trente Glorieuses, as the 
French call them) can be seen as the period in which this tension was resolved by the combination 
of Keynesian macroeconomic management and the social-democratic welfare statea€!. But the tables 
were turned in the space of a few years.
Hayek triumphed in the 1970s, both in DeLonga€™ s symbolic terms and as the intellectual star of 
the decadea€!..

This account leaves DeLong, and his readers, with two big problems. First, did technological 
progress really cease to work after 2010 and, if so, why? Second, why was a relatively short burst 
of high inflation enough to overthrow social democracy yet decades of poor economic 
performanceinsufficient to generate an alternativeto
neoliberalism? On the first question, I am a bit more optimistic than DeLonga€!. Information is a 
a€oenon-rivala€n produca€!. Traditional measures of output, income and consumption become less and 
less relevanta€!.

On the second question, DeLong argues, correctly I think, that social democracy was a victim of its 
own successa€!. Neoliberalism promised a return to prosperity. By the time it became clear that 
this promise would not be realised, expectations had been lowered so much that (for example) a 5 
per centrate of unemployment was seen as a
success rather than the disaster it would have been perceived as in the 1970s. Again taking the 
optimistic view, we are seeing a gradual rehabilitation of the institutions of the mixed 
economya€!. Perhaps we can finally put the era of neoliberalism behind us.

Slouching Towards Utopia: An Economic History of the Twentieth Century
By J. Bradford DeLong I John Murray I $34.99 I 624 pages

The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism
By Sebastian Edwards I Princeton University Press I US$32 I 376 pages

The information age point is, I think, a very good one.
Perhaps this is the way to put it:

•  If you are producing a "rival" commodity, something that costs real resources to make another 
copy of and that can only be used by at most one person at a time, the ratio of user surplus to 
factor costa€”the resources consumed and the money paid to produce the commodity a€”is of the order 
of magnitude of one.

•  But for an information-good, paid for by the fumes off of advertising dependent on the users, 
attention, the ratio is much much larger: perhaps on the order of 10. (Although we really do not 
know: we do nothing but guess here.)

•  Thus we have the prospect of an acceleration of wealth perceived as real user values, even as 
factor reward, values rate of increase slows to a crawl.

Perhaps.

An attention economy is a very odd beast.
I                  do not think we have a good handle on it.

I want to agree with John, and maybe I willa€”after I purchase and put on my meta-verse glasses. 
But when I buy a rival, good, I know that it is something I want to pay attention to. By contrast, 
I find the infosphere pushing me lots of the time to pay attention to things that, afterwards, I am 
sorry I did.
Things are very complex. I do not think I have a very good handle on them.

With respect to the second of John's main points in the passages I quote, I am also much less 
optimistic than he is.

It would be very nice to go back to social democracy: the shotgun, marriage of von Hayek and 
Polanyi, blessed by John Maynard Keynes. Certainly neoliberalism has not delivered for any 
onea€’’except the plutocratic rich, whose wealth it has amplified to a degree that I would say is 
almost beyond the dreams of avarice, save that the dreams of avarice seem to have
no limits whatsoever.

But the failure of neoliberalism has not led to a movement to restore, social democracy.
Rather, the dominant vibe seems to be:

• Economic growth is too slow for us to be able to afford to pay the citizensa€™ benefits 
envisioned by social democracy.

• Besides, too many of those benefits go to those who do not deserve thema€”to the moochers and 
slackers.

• Thus social democracya€™ s benefits are too dearly bought, at a price that society is unwilling 
to pay.
Yes, this is a strange pattern of thought. But it is out therea€!

I find myself thinking that what I really need to do is go back and reread my Friedrich Engels. I 
need to think about how changing technology induces changes in the forces of production that then 
require changes in the relations of production which have consequences for the 
political-social-cultural superstructure built on top of that.
Plus the changes in the long 20th century have come so damn fast.

Starting in 1000, it was was 650 years from feudal to commercial gunpowder-empire society, and then 
220 years from commercial gunpowder-empire to steam-power society. You have time to experiment with 
different modes of organization, communication, and governance built on top of the changing mode of 
production. You have time to see what worksa€”or at
least what does not catastrophically crasha€”and for things to reach rough equilibrium, or at least 
stable trench lines.

But then we only have 40 years from the steam-power mode of production to the 
second-industrial-revolution mode. And then there are only only 40 years from 
second-industrial-revolution to mass-production, 40 from mass-production to global-value-chain, and 
we are now clearly on the way to a dimly visible info-biotech mode of production. And each of these
within-40-year shifts looks to me to be of the same order of magnitude as the shift from the feudal 
to the commercial gunpowder-empire mode of production.

The overwhelming piece of change has consequences: you cannot claim that any sort of equilibrium 
has been reached between forces and relations of production, or between relations and 
superstructure, as you could claim had been reached in the transition from feudal to commercial 
gunpowder-empire or from commercial gunpowder-empire to steam-power modes
of production.

Ahem.

All this is to say that I fear there was a very strong elective affinity between mass production 
and mid-20th century social democracy.
Without those underpinnings, stable social democracy may well be next to impossible.

But I do not know how to make this argument convincing, or even what it is. I just sense that there 
is an argument there, but they will be correct.
Perhaps I should ask GPT-Chata€!

Share Brad DeLong's Grasping Reality

MUST-READ: Adam Gurri on A%e Case Against Dictatorship:

Very nicely done:

Adam Gurri: The Case Against Dictatorship - Liberal Currents: a€~Democraciesa€! are sclerotic, 
indecisive, and dithering; by contrast, states ruled by strong and capable dictators are capable of 
rapid policy changea€“or so it is argueda€l. It is ChinaaC™ s system, rather than a monarchy or the 
fascist state, which stands as the alternative to
liberal democracya€!. Regimes blundera€!. But contrary to Mussolini and less nefarious critics, 
liberal democracy does have important structural advantages over its rivals that are too often 
overlookeda€!. Every society faces crisesa€! [that] produce broad unrest among the highly capable 
a€oemodulara€n masses, as well as among elites.

Liberal democracies have the mechanisms to see the signs of unrest before it erupts, and to act 
decisively in response to this information. By contrast, the very means by which non-democracies 
insulate incumbents from competition sabotages their ability to understand and respond nimbly to 
changing circumstancesa€!.

The a€oemodularitya€n of the modern citizen, stemming in no small part from the broad-based 
enrichment and access to technologies of coordination, creates a great deal of risk for regimes 
that outright ignore even very small interest groups. Genuinely open electoral competitions for 
government leadership with universal enfranchisement
provides an institutional valve for the many interests and factions of a nation-state to exert 
influence, thereby discouraging extra-institutional measures. This is especially true of 
legislatures, which by their nature subdivide the electorate and thereby create representatives to 
negotiate on behalf of particular interestsa€!.

The myth of the dictator is of a man who is not held back by politics and is therefore able to act 
decisively on behalf of the public good. Buta€! the termination of electoral competition does not 
mean the termination of constituents that must be appeaseda€L Barriers to electoral contestation in 
the institutional sphere and the barriers to public
criticism in the information sphere come at a costa€! leave[s] them flying blind to the level of 
their true supporta€!. Non-democracies that tend to be more successful and long lastinga€! come 
quite close to the line of being liberal democracies, and simply take measures to make it very 
unlikely that current incumbents will have to leave
officea€!.


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ONE POEM: Programming Folkware:

Lou Ellen Davis: The Last Bug: a€~a€oeBut you're out of your mind,a€D they said with a shrug.
a€oeThe customer's happy; what's one little bug?a€D

But he was determined. The others went home.

He spread out the program, deserted, alone.

The cleaning men came. The whole room was cluttered

With memory-dumps, punch cards. a€oel'm close,a€D he muttered.

The mumbling got louder, simple deduction,

a€oel've got it, it's right, just change one instruction.a€D

It still wasn't perfect, as year followed year,

And strangers would comment, a€oels that guy still here?a€D

He died at the console, of hunger and thirst.

Next day he was buried, face down, nine-edge first.

And the last bug in sight, an ant passing by,

Saluted his tombstone, and whispered, a€oeNice try.a€D

The poem was written in December of 1967: when IBM cards were fed into card readers face down, with 
the 9-edge first).
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O A% Things Azt Went Whizzing bya€!

Very Briefly Noted:

•  David Yaffe-Bellany: How Sam Bankman-Frieda€™ s Crypto Empire Collapseda€l A masterclass from 
David Yaffe-Bellany o/The New York Times on not to cover SBF.


•  uan r roomKin (zuzijacKie caimes nas an assignment lor railing political reporters: a^ jacKie 
caimes, a veteran rormer wew rorK times wnne nouse reporter, in up media iwitter over me weeKena 
wnn a powenui ana nearaeit piea to ner rormer colleagues to aoanaon raise equivalence wnen covering 
me two political paraesa^i one oj me

asymmetries I see in my daily life is the Democratic politicians are somewhat scared of we 
democratic economistsa€”genuinely want us to approve their policy proposals, and craft them with 
that in minda€”call republican, politicians are confident their team economists will fall into line 
no matter what. The New York Times, as far as I can see,
never tried to get into the equivalent ood equilibrium.

• Economist: Has private equity avoided the asset-price crash?: a€~No, but everyone is enjoying the 
charadea€!

•  Matt Yglesias: Why hasna€™t technology disrupted higher education already?: a€~The key question 
about AI and school is about the pasta€!

• Noah Smith: Techno-optimism for 2023: a€~What you should be excited abouta€!. The A.I. 
breakouta€L The energy revolution rolls onwarda€!. The strange biotech booma€!. There are 
othersa€’’falling launch costsa€! quantum computinga€! workable brain-computer interface 
implantsa€!. No matter what happens to the total factor productivity
numbers, Ia€™ 11 have plenty of new material for these techno-optimism posts throughout the 
decadea€!

•  Robin Greenwood & Marco C. Sammon: The Disappearing Index Effect: a€~The abnormal return 
associated with a stock being added to the S&P 500 has fallen from an average of 3.4% in the 1980s 
and 7.6% in the 1990s to 0.8% over the past decadea€!

• IBM: IBM Unveils 400 Qubit-Plus Quantum Processor and Next-Generation IBM Quantum System Two: 
a€~"The new 433 qubit 'Osprey' processor brings us a step closer to the point where quantum 
computers will be used to tackle previously unsolvable problems," said Dr. DarAo Gil, Senior Vice 
President, IBM and Director of Researcha€!
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AJs:

A complete inability to recognize on ProPublicaa€™ s part that its quality control has failed, and 
that its anxiety to be non-partisan made it easy play for Republican staff grifters. And, of 
course, an organization that cannot admit mistakes will soon have no quality control at all:

James Fallows: On That ProPublica a€~Chinese Lab Leaka€™ Story: a€~ProPublica and Vanity Fair 
co-released an investigative reporta€!. It started with leads from a team of Republican staffers in 
the U.S. Senate.  The central figure in the story is a man named Toy Reida€! [who] claims to have 
unique insight into the nuance and

meaning of official Chinese documents.... Almost as soon as the story appeared, it was met with 
questions, criticism, and derisiona€!. Skepticism about the story was entirely separate from views 
on the a€oelab leaka€D hypothesis itself.  The controversy involves language, evidence, and 
journalistic transparency and accountabilitya€!

Oa€™Kane: a€oeYes, exactly. I actually had been avoiding the ProPublica response, because I knew it 
was going to make me angry. And it has made me angry a€!

I need to figure out how to apply this to our current situation: I need to have a model of the 
natural rate of inflation at hand:

George A. Akerlof, William T. Dickens, & George L. Perry: The Macroeconomics of Low Inflation: 
a€~We question the standard version of the natural rate modela€!. Downward nominal wage rigidity in 
an economy in which individual firms experience stochastic shocks in the demand for their 
outputa€!. There is no unique natural
unemployment rate. Rather, the rate of unemployment that is consistent with steady inflation itself 
depends on the inflation rate. In the long run, a moderate steady rate of inflation permits maximum 
employment and output. Maintenance of zero inflation measurably increases the sustainable 
unemployment rate and correspondingly reduces the
level                                                                                               
                                                               of output. We show that these 
effects are large, not negligible as some previous studies have claimeda€!


Read Brad DeLong's Grasping Reality in the Substack app
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Read Brad DeLong's Grasping Reality in the Substack app
Available for iOS and Android

Get the app

Leave a comment
Subscribe now