Tag Archives: Hodgson

The Longue Durée (The Long Time Span)

The former Chairman of the Federal Reserve, Alan Greenspan has had a long and distinguished career in public service, providing economic guidance to both Republican and Democratic Administrations alike.

Nevertheless, this explanation makes me question Greenspan’s–as well as his cohorts’–naiveté. 

And surely, his shock at the economic situation as well as his explanation as to why he failed to anticipate the problems with the market resonated with many other key decision makers: the economy had continued to perform well for forty years. Nevertheless, this explanation makes me question Greenspan’s–as well as his cohorts’– naivete.

Unfortunately, Greenspan’s lack of foresight reveals a major lack of hindsight. Forty years is but a blink of the eye in the course of time. Had Greenspan and others looked at the performance of the economy from the perspective of the longue durée— an approach advocated by the great French historian Fernand Braudel in his book On History (University of Chicago Press, 1980)– he certainly could have fathomed the market crash, even if he were unable to predict it.

One need only consider the insights of Eric Beinhocker, in his recent book, The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics. (Harvard Business School Press, 2006) Beinhocker’s evolutionary approach is consistent with Braudel’s notion of the longue durée insofar as he emphasizes the on-going cumulative processes that converge in the course of history to yield discernible patterns over time. Pointing to the collapse of the English economy in 1315, Beinhocker notes, for example:

Depressions, recessions, and inflation are not exclusively modern phenomena: they are patterns that have recurred since the beginning of recorded history. There are other patterns in economics that are equally old, including the long-run growth in wealth per person. . . and the distribution of wealth. . . For these patterns to be so old, they must be the result of causes that are deep in the workings of economics, cases that are independent of the technologies, government policies or business practices of a particular age. (p. 161)

As the market crash makes clear: the time for interdisciplinarity is here!

Today’s understanding of the present market crisis should not, therefore, be attributed solely to the failure of politicians to regulate the market so as to promote not just profits but also the public interest. Academia is also partially at fault. As Geoffry Hodgson has argued, in How Economics Forgot History: The Problem of Specification in Social Science (Routledge 2002), understanding the economy as it has evolved over the longue durée requires not just a dialogue among disciplines but also new theoretical approaches that build on a long view of history and, thereby, provides a more realistic, while at the same time more complex, level of analysis. As the market crash makes clear: the time for interdisciplinarity is here!

The End of the End

The End of History

The End of History

Recent events in Poland, Georgia, and Russia bring to mind Francis Fukuyama’s 1992 popular–but contentious– book, The End of History and the Last Man. In this book, Fukuyama argues that the fall of the Soviet Union and the subsequent triumph of liberal democracy was ushering in a new era of peace, in which divisive ideologies–and hence history–would be dealt a fatal blow.

Fukuyama, however, tempered his conclusion in a subsequent book, entitled Our Posthuman Future. According to Fukuyama, notwithstanding the death of ideology, the human race still faces serious challenges–in particular, coping with the rapid advance of science and technology.

In Sunday’s Outlook Section of the Washington Post, Fukuyama revisits his original thesis in the light of recent events. In a piece entitled, They Can Only Go So Far, Fukuyama warns against overreacting to the global shift towards authoritarianism. As he says: “The world’s bullies are throwing their weight around. But history is not on their side.”

“The world’s bullies are throwing their weight around. But history is not on their side.” 

Harking back to his arguments in The End of History, Fukuyama differentiates today’s autocrats from those in the past based on their lack of ideology–that is to say, their lack of passionate and compelling ideas–as defined by Fukuyama. Because they have no real ideology, these autocrats–according to Fukuyama–cannot attract a following, and hence are not a real threat.

What might the Georgians and the Poles say to that?

What might the Georgians and the Poles say to that?

 

Russia on the Border with South Assetia

Russia on the Border with South Assetia

To seek assurance from Fukuyama’s words, we must believe that world conflicts will subside as ideologies converge, and we all become capitalists, enveloping our actions in democratic platitudes. This argument presumes that ideas and ideologies are the only thing worth fighting for. What about other forces, such as greed, racism, hatred, and imperialism? Will their appeal disappear along with conflicting ideologies? Consider the United States, for example. Even from this most favorable vantage point, we see that capitalism and democracy are compatible with violence, environmental destruction, poverty, and war, itself. (See, for one discussion, Robert Kagan, Dangerous Nation: America’s Place in the World From Its Earliest Days to the Dawn of the Twentieth Century, Knopf, 2006).

Equally questionable is Fukuyama’s claim that history plays favorites, and that, when it comes to ideology, the West’s version of capitalism will be the unchallenged winner. For a cautionary tale, recall that Hitler, Mussolini, and Tojo all believed that their causes were destined for success. No doubt, history matters as Douglass North is the first to point out. But history is not predictable. As we learn from evolutionary theorists, history is emergent–the product of an ongoing cumulative process comprised of multiple variables that co-evolve in highly complex and, therefore, indeterminable ways. Moreover, as Paul Pierson tells us, history follows a path dependent trajectory that is influenced not only by specific events, such as the collapse of the Soviet Union, but as importantly, by the timing, sequence and circumstances in which such events occur. Ideologies, if they are to be relevant, must coevolve along with the full array of these historical forces. The winner depends on the way that history unfolds.

Fukuyama looks for security in ideological consensus. However, when history is conceived of as a on-going and very uncertain process, consensus may lead to untold disaster. As Geoffry Hodgson has argued, survival in a complex world environment depends on adaptation–and more specifically on the innovation and competitive selection of new ideas. In turn, the generation of new ideas requires a wide variety of ideological building blocs. Fortunately, we have not seen the end of history, so a continuing variety exists. As Fukuyama, himself, points out in Our Posthuman Future, there are today many technical and scientific challenges that lay before us. Surely, these will engender new competing interests and with them new competing ideas and solutions for future survival.