Power: A Primer for Perplexed Economists

Let's Assume an Unfettered Marketplace of Ideas! Or Actually, Let's Not.

Attention Conservation Notice: Much of what is said in this post was said already in an earlier one. So if you’ve read that, you may not want to read this. On the other hand, this is blunter and slightly shorter.

On Tuesday, economists Noah Smith and Brad DeLong released an episode of their irregular conversation podcast, Hexapodia, where they talked about Acemoglu and Johnson’s book Power and Progress. I’d hoped that they might fix, or at the very least address, the blunders in Noah’s previous review of Power and Progress (discussed at too-great length here, in an essay which Brad has read). Instead, they compounded them.

I have a surmise about why the conversation went wrong. Many economists just don’t like to think about power that does not involve visible coercion at gunpoint. They are especially resistant to the notion that power and ideas might be intertwined. Instead, being economists, they prefer to believe that ideas are intertwined with markets. Specifically:

By waving their hands toward this imaginary intellectual marketplace, in which everyone definitionally competes on an equal footing, they can wave away all counterclaims. Neither impertinent criticisms from non-economists, nor heretical anti-market arguments from fellow initiates can even scratch the surface of their magnificent assurance. Such counterclaims effectively become invisible.

That might seem like a rather strong hypothesis. But it is the only plausible theory I can come up with as to why Noah apparently can’t see the words and sentences printed on the pages that he read. Noah is a good guy in my books, and neither stupid nor dishonest. But there is a dizzyingly vast gulf between what Noah believes Acemoglu and Johnson are saying about power and what they actually say. And this drives the conversation with Brad in some very strange directions. This is very possibly more due to Noah than Brad. Where Brad seems to take up Noah’s arguments, he may possibly be extrapolating their implications rather than fully embracing them (Brad is clearly hesitant about the tech bros that Acemoglu and Johnson castigate). But Brad does not correct Noah, where correction is urgently required. He echoes and amplifies.

Some pretty spicy claims get echoed! Acemoglu and Johnson, you see, base their entire theory of power on the eloquence of techbro poasting. Specifically, according to Noah:

Acemoglu and Johnson believe that entrepreneurs … select from a menu of technologies, … to replace people or … that complements people's labor … often they'll choose the wrong thing. And not only will they choose the wrong thing, but they will use their quote-unquote power … persuading people [by] writing articles and … PR, … [and] their mighty power of blog posts … tweeting to … convince the world to allow them to invent the human replacing thing

As Noah explains later, the power of these entrepreneurs is nothing more than their ability to talk in an “unrestricted marketplace of ideas” with “freedom of the press and speech." Such an understanding of power is “useless and even counterproductive” since it assumes that “people just hearing arguments and deciding that those arguments are right means power has been exercised.” Power becomes a “residual” explanation: “[t]he only way you get there is by just assuming that all outcomes are due to power and then … applying the label power to whatever you think produces the outcomes.”

That all sounds very bad.

This is their thesis, this is what they're arguing and it makes no sense to me and like what are you guys even talking about?

Indeed! What are they even talking about? If asked out of the blue, I would surmise that Acemoglu and Johnson would not make such an idiotic argument. But Noah tells us that he has the goods to show that they did. Amateurs like Bill Janeway might disagree with Noah, but Noah surmises that this is because Bill did “not read the book in detail.” Noah, in contrast, has read it in “excruciating detail.” His, perhaps, is a very serious, thoughtful critique that has never been made in such detail or with such care.

For example: Noah has discovered that Acemoglu and Johnson respond to the question “why are the tech bros so persuasive?” with a simple answer: “luck.” He has found the killer quote:

They admit that quite a bit of the process of persuasion is random and declare that you are enormously lucky if you get the right idea, just the right ring to it at just the right time. … I do not understand why we should put accidental success in a non violent marketplace of ideas in the same conceptual category as chattel slavery and feudalism.

So now, let’s move away from Noah to look at what Acemoglu and Johnson actually say! They do indeed argue that “all else equal, an idea is more likely to spread if it is simple, is backed by a nice story, and has a ring of truth to it.” But the problem for Noah’s interpretation is that they spend the next fifteen pages or so explaining at great length why all else is not equal, beginning with the very next sentence after the one that Noah quotes.

Acemoglu and Johnson argue that the success of ideas has some stochasticity - it is not a simple product of brute power. That is the burden of the sentence that Noah singles out as their core claim, and of similar provisos scattered throughout. But they certainly do not think that “success” is merely “accidental.”

For starters, Acemoglu and Johnson claim that the success of ideas depends on the “social status” of their originators and transmitters. Ideas that come from “respected cheerleaders” are more likely to spread. Social status is associated with success - we are hardwired to admire and imitate those who seem to be successful. But “societies and their rules” also shape social status and charisma: women and minorities have had enormous difficulty in having their voices heard, even when they have great ideas! More generally:

A huge amount of creativity, charisma, and hard work is no guarantee that an academic or entrepreneur will come up with an impactful idea. Prevailing beliefs and the attitudes of powerful individuals and organizations determine which ideas will appear compelling, rather than wacky or so ahead of their time as to be safely ignored.

Social networks also create power imbalances. Some people are very well connected. Others, not so much. Acemoglu and Johnson say that:

when it came to the power of big banks, it was not only ideas and stories. Bank executives and board members belonged to social networks that had enormous economic power and propagated these ideas. The big-finance-is- good idea was being repeated by economists and lawmakers, who were eager to provide theories and supportive evidence.

Furthermore:

It is not just the self-confidence and the social networks that powerful people have for propagating their ideas. It is also whether your voice is amplified by existing organizations and institutions, and whether you have the authority to counter objections.

Specifically this allows for important forms of agenda control:

The rules of the political system determine who is fully represented and who has political power, and thus who will be at the table. If you are the king or the president, in many political systems you will have ample influence on the agenda—sometimes you can even directly dictate it. Likewise, economic institutions influence who has the resources and the economic networks to mobilize support and, when necessary, pay politicians and journalists.

In short: theirs is not a simple theory of tweeting eloquence and accidental success! Nor, for that matter, is it an argument that starts from a “marketplace of ideas.” As Acemoglu and Johnson explicitly note:

the marketplace for ideas is an imperfect frame for technology choices, which are at the heart of this book. To many people, the word market implies a level playing field in which different ideas try to outcompete each other primarily on their merits. This is not how it happens most of the time.

To sumarize: Noah’s Theory of Acemoglu and Johnson is as follows.

• Techbros and entrepreneurs write blogposts and tweets in a free and thriving marketplace of ideas. Through luck and eloquence, the techbros persuade people that their arguments are right. This Is Somehow Power.

Acemoglu and Johnson’s Theory of Acemoglu and Johnson is just a little bit different.

• Success in ideas is in part stochastic. Luck does play a role. But so do systematic inequalities.

• People who are perceived as more successful have higher social status and are more likely to have influence.

• People who do not belong to disempowered minorities have higher social status and are more likely to have influence.

• People who have dense connections to powerful economic networks are more likely to have influence.

• People who have the ears of politicians are more likely to have influence.

• People whose voice is amplified by existing institutions and organizations are more likely to have influence.

• People who have substantial financial resources to sway journalists and experts are more likely to have influence.

• This ain’t no level playing field market of ideas! Political, financial and social asymmetries have substantial consequences for who has influence and who has not.

Acemoglu and Johnson might also reasonably take exception to Noah’s claim that they treat power as a residual, assuming that power has been exercised when people are persuaded. They might point for example, to their extended discussion of Ash, Chen and Naidu’s empirical findings about the impact of “law and economics” seminars, funded by right wing foundations, on decisions made by federal judges. I’ve already described these findings at length in a previous post, so I’ll just quote myself:

[Ash, Chen and Naidu] wanted to discover what happened when right wing foundations paid for judges to attend seminars in nice resorts, with great food and drink, where they listened to Milton Friedman and his mates explaining The Virtues of Free Markets, the Evils of Government Regulators, the Benefits of Chicago School Antitrust Doctrine, and the Healthy Incentives Provided by Harsh Criminal Sentences.

The evidence shows, unsurprisingly, that the judges were influenced! Not only were there measurable long term consequences for the judges’ decisions after they were wined and dined but there were secondary consequences, via social influence osmosis, for other judges whom the first set of judges worked with.

Again: this ain’t no residual account. There’s actual econometrics! These findings were published by the National Bureau of Economic Research, an organization that Noah is possibly familiar with. Oh happy marketplace of ideas, where the Scaife Foundation and Amazon Flex workers alike can try their luck, and hope for accidental success in influencing federal judges!

At this point, readers may reasonably be asking themselves why Farrell is sufficiently exercised by a book review and its aftermath that he has devoted two lengthy posts to discussing it. The reason is not that I bear any grudge against either Noah or Brad. I like both of them! I look forward to yelling at them about this stuff over beer, and them yelling back!

But as Noah suggests in his own review of Acemoglu and Johnson, friendship shouldn’t get in the way of proper debate. And the way that they set up the argument doesn’t contribute to proper debate. It actively confuses it. I do not want them to shut up, or to give in (if they converted to my side, I’d possibly even be slightly disappointed). Instead, I want them make good arguments and good criticisms so that my own and others’ counter arguments and counter criticisms will correspondingly become more robust. But that would require, at a bare minimum, that they understand, and respond to, the actual claims made by their interlocutors. At the moment, they don’t get close. Instead, their rhetoric about the Marketplace of Ideas blurs into the tacit assumption that Markets Know Best.

It is worrying that Noah seems incapable of composing the words and sentences that he is reading into a coherent whole that plausibly reflects the authors’ intentions. It is much more worrying that others seem to agree with him (he reports that the lurkers are very definitely with him; economists are emailing him clandestine high-fives).

And what is most worrying of all is that this cloud and confusion are descending on a very important debate. What is at stake here is how or whether we should regulate technology. Acemoglu and Johnson suggest we should regulate, so as make it more likely that we end up on relatively benign pathways of technological development rather than relatively malign ones. Their book argues that the prevalent rhetoric of techno optimism, pushed by various Silicon Valley figures, obscures the political choices we face. If I read them right - and they can correct me if I’m wrong - Brad and Noah are to some greater or lesser extent skeptical that we should be making political choices rather than market ones. At the least, they want much more scope for markets to shape the trajectory of future technological development than Acemoglu and Johnson seem to.

Noah and Brad set up this dispute as a fight between the forces of progress and the “Luddites” (Noah uses the word as a pejorative), those like themselves who embrace the forces of discovery and those like Acemoglu and Johnson who want to hold them back. But in so doing, they underestimate both the strengths of their opponents’ case and the weaknesses of their own.

They cast Acemoglu and Johnson - and me - as wanting to make the techbros shut up. As Brad puts it, “Acemoglu and Johnson, joined by Henry Farrell, say that tech bros having large megaphones is a bad thing … a source of … exerting power over other people in an profoundly illegitimate way.” For him, then, the question is whether Acemoglu, Johnson and Farrell think that:

tech bros’ exercise of free speech is fundamentally illegitimate, or whether they want us draw some distinction between free speech and free reach, and to say tech bros should be allowed to speak but only in small soundproof booths where no one can hear them

This is … a quite remarkable interpretation. Acemoglu and Johnson do not call for gagging tech bros, or confining them to the Cone of Silence (nor, for that matter, do I). As the previous discussion indicates, Acemoglu and Johnson want instead to level the playing field, so that tech bros, and those allied with them, do not enjoy an unfair advantage (in fairness, devotees of the marketplace of ideas may have difficulty in comprehending that this is a problem). Acemoglu and Johnson simply want other voices to be heard. They advocate for the building of countervailing power, and they suggest that democracy is the best way to get there.

Specifically:

We need to reshape the future by creating countervailing forces, particularly by ensuring that there is a diverse set of voices, interests, and perspectives as a counterweight to the dominant vision.

and

cacophonous voices may be the greatest strength of democracy. When it is hard for a single viewpoint to dominate political and social choices, there are more likely to be opposing forces and perspectives that undercut selfish visions imposed on people, regardless of whether they want them or benefit from them.

How Brad gets from the sentences that Acemoglu and Johnson actually write, using words, clauses, commas, full stops and other such complex technologies of transmission, to what he claims they are saying, is rather mystifying.

And the problem is not just that this interpretation is ludicrous. It’s that it allows Brad and Noah to completely avoid addressing Acemoglu and Johnson’s fundamental challenge. Should the development of technologies be subject to some form of democratic control, or should it be left to market forces? If Brad and Noah think that market forces are preferable, they should make that case!

Thus, Brad and Noah fail to address - fail even to see - the strengths of Acemoglu’s arguments, mysteriously interpreting a liberal call for MOAR DEMOCRACY as an illiberal call for the silencing of opponents. They equally fail to see the weaknesses of their own.

When Brad worries that:

if we actually delay technological progress out of a fear of it … we are passing up opportunities to increase our human wealth, power and flourishing that are very hard to get any other way. And we're also believing that the future is unable to deal with its problems… depriving them of opportunities to turn things to good that they might well be able to turn to good simply on the grounds that we know better than they, what the consequences of these technologies will be. When actually we do not know them at all.

Noah is moved to launch into an extended fantasia on how “after combing through” the book, he has failed to find a “scrap of evidence” for the proposition that entrepreneurs and technologists can foresee the consequences for labor of the technologies that they invent, and how various tech folk and entrepreneurs are terrible at predicting the future. Again, according to Noah, “entrepreneurs … select from a menu of technologies, … to replace people or … that complements people's labor … often they'll choose the wrong thing.” But under Noah’s interpretation, Acemoglu and Johnson are wrong, because they believe that entrepreneurs have the foresight to envision what their technologies will do to labor in the future.

I fear that this is becoming repetitive and dull, but that is not what Acemoglu and Johnson are arguing. They do not claim that entrepreneurs make a single choice over technologies that they might get right or wrong, leading to the one path of development or to the other. They do not worry that tech people are prophetic geniuses, fiendishly choosing the worst possible human future so as to maximize their personal advantage. Instead, they fear that the bros’ unseeing ignorance leads to over-reach, but that their choices may nonetheless become self-reinforcing because of the mutually reinforcing intersection of influence, technological development and political power. Again, it is worth reading their actual written words:

Those enriched by new technologies, or whose prestige and voice are magnified, become more powerful. Technological choices are themselves defined by dominant visions and tend to reinforce the power and status of those whose vision is shaping technology’s trajectory. This self-reinforcing dynamic is a type of vicious circle. Students of history and political economy have highlighted such dynamics, documenting the pathways that make the rich politically more influential and how this additional political power enables them to become richer. The same is true of the new vision oligarchy that has come to dominate the future of modern technology.

This claim doesn’t rely on tech bro foresight: it suggests that power builds on power regardless of whether people can see the future or not. Acemoglu and Johnson’s implicit model is not a one shot choice but a dynamic account of how trajectories develop and perhaps become self-reinforcing.

And this in turn challenges Brad’s optimism that people in the future will be able to deal with their own problems far better than we will. If Acemoglu and Johnson are right, our children and grandchildren may not be dealing with these problems in circumstances of their own making. Instead, the trajectories that determine who makes the choices, who, indeed, defines what is a problem and what is not a problem, are being shaped today and tomorrow and tomorrow. When increasing returns intersect with political and social influence, it is perfectly plausible that the decisions we make right now could dramatically constrain the ability of people in the future to make decisions at all.

Moving away from democracy towards a fuller embrace of market awesome may radically undermine the capacity to exercise democratic choice later. Plumping for the new vision oligarchs, and continuing to support them over time, potentially vitiates collective choice through democracy in order to encourage unbound marketism, with a possible side-order of unbridled authoritarianism should folks like Musk, Thiel and their ilk get their way.

Clearly, I am (loosely) on one side in this argument, and Brad and Noah are on the other. But I am not trying to say that their position is ridiculous or stupid. There are good arguments to be made for it! There are good criticisms to be made against Acemoglu and Johnson’s take, and, for that matter, my own (I can think of at least half a dozen without even trying). Those criticisms Are Not Being Made. Instead, we are being subjected to inane ripostes to arguments that were never made in the first place.

Again, I am being blunt about the deficiencies of Brad’s and Noah’s conversation, not because I want to take them down, but because I want them to do better. As per this “[w]hen we criticize others, we should try to do so non-pejoratively, but crisply and clearly … some people will still find plainly stated criticisms obnoxious … but they will be more likely to benefit from the criticisms if they are clear rather than circumspect.”

Doing better would require actual engagement with the arguments that Acemoglu and Johnson are making about power, rather than with an ideological fantastification of what they are saying, woven as a protective shield around the controlling assumption that we do indeed live in a marketplace of ideas, and that anyone who says different is unserious. It would require an account of Acemoglu and Johnson that at the very least wobbles toward becoming a caricature, grossly distorting some characteristics, while remaining recognizable. We’re still some considerable distance away from even that.

It’s startling that it is so difficult for economists of a certain bent to even see the argument that power may be exercised through influence and ideas, let alone to understand it, let alone embrace it. Of course, Not All Economists etc etc, but this conversation really was a botch. I think that they should delete it as a bad job, read Acemoglu and Johnson, this time paying attention to what they were saying, figure out their actual points of disagreement and start over again.