On a fundamental level, a level so fundamental that it describes pretty much everything but is mostly meaningless and uninteresting, our brains are distinguishing machines. Basically, when we think, we separate things from each other mentally. The easiest metaphor, which is not really a metaphor, is the Hollywood view of someone regaining consciousness. On the screen we see the world through their vision: they open their eyes, their sight gradually sharpens, and they begin to distinguish one thing from another. From the moment we are born--and even before--we are separating things from each other in our mind. You could say we are "de-conflating" things.
But thinking is also about understanding the connections between things--understanding how things are not separate. Just like our hands connect to our shoulders by way of our arms or the light switch connects to the light, things are related by more abstract relationships as well: the ground is connected to the sky by relationships of gravity, distance, and the air in between; people connect to other people by means of family or friendship or professional or other relationships, now connects to later by means of all of the causes and effects that occur in between.
Sorry if this is sounding all mystical and wishy-washy; it is going to get worse before it gets better.
Because I am going to to talk about Yin and Yang for a second. I know next to nothing about non-western philosophy and my understanding of the concept of Yin and Yang does not go far beyond the the first few paragraphs of the wikipedia entry. The article summarizes the concept as describing "how polar opposites or seemingly contrary forces are interconnected and interdependent... and how they give rise to each other in turn in relation to each other." I have heard this described plenty of times and it seemed like an important truth and perspective on things but it never really grabbed me.
But the other day it kind of did, because I started thinking about it more in terms I usually use to think about other things--in this case, the distinction/connection framework above. And I rephrased it for myself in a way that I could understand a bit better.
Economics and politics are enormously complex systems that are full of relationships we can only scratch the surface of understanding. In our scratching, we have an easy enough time distinguishing something--we can measure GDP and payrolls and sales data, or votes, or demographics easily enough. (other things are much harder to measure and therefore distinguish, but that's a topic for another day) But we have a much harder time putting things back together. Economics is about cause and effect, and it has all kinds of snazzy ways to try and pull them apart, but putting them back together meaningfully is an awful lot of work and awfully indeterminate.
And so we arrive at the point I have been dancing around: we separate a lot of things in our minds that cannot truly be separated. Yin-Yang is a specific classic example of this: dark cannot exist without the light, good without evil. But our minds do this in all kinds of less abstract ways as well: supply and demand, employer and employee, policy and politician, winners and losers. We end up with two (or more) parts of something we have separated for convenience or because we did not understand them as one single thing.
And I am arguing that this can be a problem. When we forget that businesses need workers but they also need good leaders. When we forget that every dollar I have is a dollar you do not (or at least it lowers your purchasing power). When we forget that laws need people who understand them and obey them and are incentivized to do so.
Any time we are talking about an economic concept, that concept is embedded within a vast network of other concepts. This conceptual network has in turn been assembled to describe a vastly complex real world. Much of the most dangerous economic ideas--and I don't mean dangerous here in a good way--are those that ignore the vast complexity of reality in favor of their own internal logic. This can happen both through elaborate models based on shaky assumptions, or through a certain ignorance of the status quo and the variety of causes that have brought us to it.
More fundamentally, the idea of economics itself does not stand alone. Politics and economics are two concepts we separate but, when separated, they achieve a certain degree of rarefied meaninglessness. Trade may exist outside of formal authority (two merchant ships swapping rum for ale on the high seas, for example) but is never divorced from relationships of power (the ship with the bigger guns may end up with a better deal). Moreover, actual markets, in the sense of buyers and sellers coming together and creating a price) may indeed require formal authority. Certainly nobody is arguing too loudly that they do not; e.g. libertarians are arguing that markets require a very limited and specific amount of formal authority. Dean Baker describes the connection better than I can.
Our tendency to cut thing up is useful, but it can limit our ability to see the bigger picture. The complexity of political economy makes it difficult to answer many big questions conclusively, but in dividing and conquering we may find our separate territories less firmly in our grasp than we had believed. How do we avoid these pitfalls, particularly when specificity is a prerequisite to truth? When we try to connect the pieces back together, will we have a useful model or a two-dimensional picture of a three-dimensional world? How can we know a complex system in a relevant way?
One way to start is to acknowledge the complexity, particularly where economic ideas intersect with policy and the everyday life of non-economists. The political relevance of economics pushes it toward simplicity--politicians need clear numbers and talking points, not lengthy explanations without conclusions. This is a difficult tendency to counteract, but a possible attempt could be through better economics education. Economics is taught like a hard science, giving new students a toolbox of concepts and uncritical assumptions. These teachings percolate unhelpfully into popular discourse, lacking nuance and serving in the interest of polemics; teaching more of the controversy and the relevance could give students a far better appreciation of the role of economics in our world.
Everyone has, at one point or another, had a feeling of revelation. Some revelations are extremely mundane, others are esoteric--I don't necessarily mean some kind of transcendental religious enlightenment, perhaps just understanding a new mathematical idea or realizing why your friend was acting strangely. Sometimes revelations involve connecting ideas that had existed independently in your mind, sometimes they are new ways of cutting ideas up. But they cause us to think differently about things we already knew, or thought we knew.
The social sciences are endlessly revealing of the world we know or think we know, and the ways they break apart and reassemble the human relationships we thought we understood can be both immensely useful when juxtaposed against our own. But our recreated understanding is not necessarily any more "true" than whatever understanding we had previously, and we stand to lose something in our careful scientific analysis, because the real world is not an equation. Yin and Yang resist being broken apart, the analysis destroys the subject.
Alright--we probably don't need to be so melodramatic about it. But we should at least be wary of the the limits of abstraction.
An important follow up question would be
'what would economics look like if it took politics into account' (or has it already exist? I want to say Marx, but now I am thinking, 'how can economics take politics into account without being ideological?)(a topic for a future post?)
It is interesting that this post precedes the post on equilibrium (since in a broader sense, general equilibrium theory aims at linking 'everything' together)
And the yin and yang image was quite striking as well. I don't know much about Chinese philosophy and medicine either but...I know that a number of ailments and diseases are thought to be caused by an imbalance between theses to elements. Could political and economic failures be explained through the lens of too much politics, not enough economics, or the reverse.
Thank you for writing this blog