Tag Archives: economics

Utopia for Realists Review – Bolder, Better, Brighter

As 2016 received the rubber stamp for the ‘worst year ever’ due to political disasters, rise of populism, ever wider inequality, many of you might be searching for an alternative offering a positive, better and brighter vision for our working lives, economic status and overall future. Utopia for Realists
can certainly cover that need for you.

Utopia for Realists by Rutger Bregman will attract your eye if you’ve recently walked past a bookshop. Its bold orange colour sets the tone for the book: a set of non-conformist ideas based on hard evidence. It offers a visionary but practical approach to utopian concepts such as Universal Basic Income (UBI), a 15-hour working week and free-movement world and asks the bigger question of ‘Can we build a better society by painting a picture of the kind of world we want to live in?’

utopia for realists

Bregman is a young (28!) journalist and historian with a particular interest in economics and a flare for creating page turning bestsellers. For any avid Freakonomics followers enjoying a good economic case study, his book outlines the specific policies that constitute a utopia:

  • UBI: Bregman argues that the cost of poverty is excruciating for government budgets and UBI is economically a rational thing to do. As he outlines study after study proving hard evidence that giving money with no strings attached does lead to significant improvements to poverty levels and unemployment, one may ask why the UK government hasn’t run a trial run (Political storms aside).
  • The working week: In the spirit of the good old utility of happiness argument, Bregman suggests that in the advent of robots and artificial intelligence ‘taking our jobs’, it only make sense for us to be working fewer hours and spend more time proactively seeking leisure. With 37% of respondents in a UK study admitting that their job was meaningless, Bregman’s argument for a 15-hour working week challenges many traditional views on workers bargaining power, the work life balance and indirectly, the consumerism model we have been working towards in the last century or two.
  • Free borders is probably the most utopian concept from Bregman’s realism. He argues that borders create exorbitantly greater inequality compared to any inequalities created by gender, race or socio-economic status inside one country and they hinder our common economic progress. As international trade has pushed many underdeveloped countries beyond the poverty level, Bregman argues that the net benefit of a borderless world is worth $65 trillion and we’re yet to tap into it.

But what about politics?

Even if you do not follow the UK political scene closely, you might be able to relate to Bregman’s argument that the Left has spent decades focusing on being ‘against’, whether that’s against war, capitalism, homophobia, climate change, but without offering a viable or convincing alternative. Bregman has drawn evidence from liberal thinkers, yet he seems to promote ideas of what we would traditionally call socialist. Bregman believes that the successful formula for a stronger Left is applying neoliberal rhetoric to a pragmatic social structure.

For an inspiration on implementing utopian ideas into practice, Bregman’s arguments are convincing and show a breadth of knowledge, research and evidence. Yet, none of what Bregman says has to be utopian, if realists become truly inspired to make a change.

Get a copy of Utopia for Realists: And How We Can Get There, £11.89

Suits and Books. Our Pleasure.

Co-author Chantal Foyer – Read her Q&A to find out more.

The real tragedy of the commons

“The creation and exploitation of knowledge in society involves a ‘tragedy of the commons’ dilemma.”

When we first mentioned to one of our relatives that we’re writing a piece on the topic ‘the tragedy of the commons’, she spontaneously asked if this has something to do with the tragedy of being simple-minded. While we still think that tops our list of funny impromptu responses, we thought that it is about time to share our views on a hot social science topic: knowledge creation, its questionable exhaustiveness and the free-rider problem. To give a flavour of a context,  in the late 1960s Garrett Hardin developed an economic theory, known as the tragedy of the commons, where he argued that individuals thinking (and acting) according to their self-interest behave contrary to the best interests of the group. This way of behavior then leads to depletion of common resources and a worse-off result for everyone. This theory though, applied to the context of knowledge creation, is a whole different story.

Not so straight-forward, more nuanced.

Whether the creation and exploitation of knowledge in society involves a ‘tragedy of the commons’ dilemma is a subject of debate which could be analysed from a number of perspectives: epistemological, economic, societal and moral. The interdisciplinary nature of the discussion demands not only a holistic approach, but also a move away from ‘distorting reductionism’  that model-induced topics could lead to. Assuming that the most straight forward solution of the ‘tragedy of the commons’ problem in the context of knowledge production is either government intervention or privatization, we’d like to propose the existence of more nuanced, tailored and context-based solutions.

Knowledge: How exhaustive can it be?

Just as the introduction of the railway had a substantial impact on the development and evolvement of managerial capitalism, so did the evolution of a symbiotic relationship between academia and business for the production of knowledge. This transformation of the standard source of production of knowledge created the need for a theoretical evolvement in the social science sphere, hence the distinction between the traditional, scientific knowledge and the multi-layered, interdisciplinary one. Defining knowledge, its types and variations seems essential in the discussion of the consequences its exploitation may lead to. At the same time its abstract, summative and omnipresent nature complements the fact that regardless of its mode, knowledge is a very different concept from any regular good. If Hardin’s pastureland allegory described a finite number of resource allocation sets, the tragedy of the commons in a knowledge context can hardly be applied unswervingly.  After all, ‘depletion through intensive use’ is not a concern with knowledge, as Thomas Jefferson stated ‘He who received an idea from me, receives instructions himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.’

Did you say efficient ROI? So if Hardin’s tragedy of the commons concept is not applicable in a knowledge context, does this imply that the exploitation of knowledge doesn’t bring negative externalities? The simple answer is no. In economics, the more traditional view of the free rider problem suggests that it creates inefficiencies and could be the driver for a market failure in the context of public goods. Without paying for the consumption of a public good, the incentive to persevere this shared resource from overconsumption is eliminated. Instead of interpreting the problem as one of consumers internalising too much knowledge, an alternative view is that, the actual free rider problem is one creating no incentives for the producers of knowledge due to the ambiguity of the potential ‘efficient return’ on investment. Hence, the insight of the real tragedy of the knowledge commons lies in the link between the financial, time and personal investment that producers have to make and the free riding consumers that utilize this idea for free. At its essence, this is a classical externality problem where an individual maximises their private benefits at the expense of first movers, which aligns with Weber’s ideas of the goal-oriented human nature.

What about regulation? A key query is whether you can regulate knowledge in the same manner as other resources, namely through the market and price mechanism if knowledge is a public good with a characteristic of non-exhaustibility. It is clear that it does not operate in the same way in a regular market since price does not signify availability or demand. Hayek’s ideas of the centrality of the price mechanism therefore cannot be applicable, yet an important notion could be derived from his work, namely the use of a ‘self-organising system of voluntary co-ordination’ that fits well with Ostrom’s approach of moving away from binary solutions.

Beyond simplifications. While in traditional terms the tragedy of the commons is considered as a problem that needs solutions, the set of solutions for knowledge production is limited to ‘collective action through government’ . On the one hand, government subsidization deals with the issue of underproduction of shared resources by moderating the risk and investing in research that will replenish intellectual resources. On the other hand, the normally high exclusion costs are reduced by the intervention of intellectual-property enabled markets. What is important though is to look beyond the already mentioned ‘model-induced myopia’ and the distorting reductionism that is often universally applied when reality is to be simplified in order to fit within economists’ frameworks. (Sorry, dear economists).

Prisoners and their dilemmas.

Following an assumption of Peter Kollock  that a way to challenge a social dilemma is not to seek solutions but to ‘change the rules of the game’,Ostrom tackles the topic of zero-sum situations and draws a parallel between the ‘tragedy of the commons’ and the lock-up problem, associated with the Prisoner’s Dilemma. Her insight is that it is the lack of knowledge about the effect of institutions for collective action that causes the social dilemma. If ‘prisoners passively accept the subordinate strategy’, then the inevitable outcome would be an inefficient one. Instead, by active participation and a creation of informal arrangements in the form of agreements or contracts, the desired mutually beneficial solution could be found without seeking any government intervention.

The real tragedy of the commons.  We see that the real tragedy of the commons rests in the lack of incentive for producers of knowledge. We see the free rider problem, which in the context of knowledge commons relates to the consumers who internalize ideas without any form of payment, is not a problem to begin with.  Frischmann’s thoughts on the free rider phenomenon challenge the traditional views by demonstrating a new perspective. By arguing that a direct return on investment is often not sought due to the private benefits that the individual encounters, he questions the perceived effects of the free rider problem, namely underproduction of shared knowledge resources. His conclusion highlighting the beneficial side of the free rider problem emasculates to a certain extent the overall notion of the tragi-comedian life of the commons. Whether due to the idea dispersion or the competition it may create, the free rider problem is not considered a recurrent threat to the knowledge exploitation model. In a nutshell, the insight that the free rider problem might not substantially disrupt the researcher’s incentive to produce knowledge, reiterates that if there isn’t a social dilemma, then by default there is no need for government, privatization or third-party solutions.

Will it be the business or the academia?

With the evolving hybrid of knowledge production, a result of the symbiotic relationship between scientists and organizations’ R&D centers, it could be anticipated that there will be an emerging ‘tragedy of the commons’, perhaps related not with the individuals’ willingness to produce an idea and the related limitations, but with the industry’s strong bargaining position, example of which could be the attraction of scientists and refraining them from pursuing the more altruistic, less self-interest based research.

Suits and Books. Our pleasure.