From microeconomics to political economy and back: thoughts on the micro foundations of the Walkaway economy
An attractive element of modern standard economics is that it is micro-founded. First, the individual agent's behavior is modeled, and an equilibrium for the model is found. Next, economists build mesoscale models (for example, partial equilibrium models for a specific market) and macroscale ones (for example, general equilibrium models for the whole economy). These are built in such a way that the lower-level equilibria generate the upper-level ones: zoom in onto a general equilibrium model and it resolves into individual consumers and firms making their choices.
This consistency is useful and elegant. Alternative economic systems should also be micro-founded to be taken seriously. Walkaway, it seems to me, makes an attempt at building a micro-founded model of a whole system (the walkaway economy), but it comprehensively rejects standard micro. It eventually replaces it with a micro behavior of its own, but of a very different kind. I can see four moves:
- Expose standard micro as based on flawed assumptions.
- Argue that the behavior of individual agents is based on intersubjective conventions. This shifts the argument from economics as we know it to political economy, the border land between economics and moral philosophy.
- Propose a political economy that works well with digital commons, and re-build a micro model based on that.
- Proceed to derive meso- and macro-level behavior founded on those new micro models.
In the rest of this post, I go through each of these steps, one section per step. There is a section 5, just a quick recap and conclusion.
1. "The origin story of Jacob Redwater": the moral theory between the tragedy of the commons.
At the end of Chapter 1, Etcetera explains the tragedy of the common to Natalie:
"Commons. Common land that belongs to no one. Villages had commons where anyone could bring their livestock for a day’s grazing. The tragedy part is that if the land isn’t anyone’s, then someone will come along and let their sheep eat until there’s nothing but mud. Everyone knows that that bastard is on the way, so they might as well be that bastard. Better that sheep belonging to a nice guy like you should fill their bellies than the grass going to some selfish dickhead’s sheep."
[Natalie]: "A fairy tale about giving public assets to rich people to run as personal empires because that way they’ll make sure they’re better managed than they would be if we just made up some rules? God, my dad must love that story.”
“It’s the origin story of people like your dad,” Hubert, Etc said. “It’s obvious bullshit for anyone whose sweet deal doesn’t depend on it not being obvious.”
Tragedies of the commons happen because people are cold-blooded, selfish maximizers of their own utility. We all know this not to be true: calculating, selfish behavior happens in humans, but is far from the main engine of what humans do. And yet, the abstraction serves two purposes. As economists know, it makes human behavior tractable with the math available in the 1840s; this gave us and elegant, micro-founded model of the whole economy. But it also justifies the giving Jacob Redwater and his peers domain over all things – it makes it moral, since all those other sheep-grazers are so amoral ("some selfish dickhead"). The same powerful people fund economics departments and co-opt economists into prestigious jobs: no wonder Natalie and Hubert encourage us to look for other possible foundations for economic behavior that do not have such a glaring conflict of interest problem.
However, tragedies of the commons are not inevitable. We will come back to them in section 4.
2. "The stories you tell come true": a political economy of Walkaway
Jacob Redwater thinks that wanting to "be that bastard" who will overgraze the common field is human nature. The impulse to greed and appropriation is hardwired in our neurons. Standard microeconomics agrees: just assume it, and build your model on top of it. Doctorow thinks that human societies can, to a certain extent decide what they want to want, and then socialize their members to want those things. In part, this is just obvious: in the real world, parents are forever trying to teach small children not to prevaricate others, to be mindful of other's needs, to wait for their turn etc. To a large part, they succeed.
In the world of Walkaway, walkaways are forever trying to internalize the heuristics that work well to navigate their lifestyle, some of which are counter-intuitive not only to us readers, but to them. This is explained by example in chapter 2 by Limpopo to Natalie (now become Iceweasel), Etcetera and Seth. Natalie:
"I’m not supposed to trade anything for anything else, it’s all a gift, like the Communist parties. That part I understand. But when we do our parties, we don’t care how much you take because at any second the cops are going to chase us out and destroy whatever’s left over, so you can have whatever you can carry. Out here, you want people to magically not take too much but also not earn the right to take more by working harder and also to work because it’s a gift but not because they expect anything in return?”
They stared at her. She shrugged. “That’s the walkaway dilemma. If you take without giving, you’re a mooch. If you keep track of everyone else’s taking and giving, you’re a creep scorekeeper. It’s our version of Christian guilt—it’s impious to feel good about your piety. You have to want to be good, but not feel good about how good you are. The worst thing is to be worrying about what someone else is doing, because that has nothing to do with whether you’re doing right.”
She shrugged. “If it was easy, everyone would do it. It’s a project, not an accomplishment.”
"Back out there in ‘default reality’ [...] you’re supposed to be doing things because they’re right for you. [...] Out here, we’re supposed to treat generosity as the ground state. The weird, gross, selfish feeling is a warning we’re being dicks. We’re not supposed to forgive people for being selfish. We’re not supposed to expect other people to forgive us for being selfish. It’s not generous to do nice things in the hopes of getting stuff back. It’s hard not to fall into that pattern, because bribery works."
The language of effort ("we are supposed/not supposed to...") and self-reprogramming ("the feeling is a warning that..") is evident. But the results are worth the effort, because in the end, as Limpopo says:
“‘The stories you tell come true.’ If you believe everyone is untrustworthy, you’ll build that into your systems so that even the best people have to act like the worst people to get anything done. If you assume people are okay, you live a much happier life.”
In other words, "human nature" leaves a lot of space for deciding how humans interact to produce an economy. This decision is collective, hence political. Doctorow is making the shift back from economics to political economy. This latter term was replaced by "economics" in the course of the 20th century, emphasizing the mathematical side of economic modelling and de-emphasizing its political and moral side. Smith, Ricardo, Malthus and Marx believed these sides to be very important, and economics itself to be a branch of moral philosophy. Doctorow clearly agrees.
3. "Work needed doing, and he could help": optimising for commons production and maintenance
As we have seen, Doctorow believes human nature to be less rigid than standard economics makes it to be. But if humans are programmable, what should we program ourselves for? And what, specifically, would be the object of programming?
The answer seems to be this: we should program into ourselves an ethos that supports practices of networked collaboration, aimed at the production of commons. This is my own conclusion, but I think it is supported by plenty of material in Walkaway itself (especially Chapter 2) as well as Doctorow's Crooked Timber essay originated from an online discussion of the novel. In the author's words:
It’s a novel about solving Ronald Coase’s coordination puzzle using networked tools. (link Doctorow's).
Walkaway's most actionable parts are tips and tricks for better coordination. For example, in open collective efforts it is important to pretend mistakes just happen, and are nobody's fault – even though, of course, they are.
If you planted a piece of structural steel in a way that the building really couldn’t work with and ignored the rising chorus of warnings, someone else would be told that there was a piece of “misaligned” material and tasked to it, with high urgency. It was the same error that the buildings generated if something slipped. The error didn’t assume that a human being had fucked up through malice or incompetence.
The initial theory had been that an error without a responsible party would be more socially graceful. People doubled down on their mistakes, especially when embarrassed in front of peers. The name-and-shame alternate versions had shown hot-cheeked fierce denial was the biggest impediment to standing up a building.
A whole subplot is dedicated to comprehensively demolishing the reputation economy idea. For us Econ-SciFi types, this is intriguing since the nomad society in Bruce Sterling's Distraction is based on "reputation servers". But Doctorow clearly hates it.
You couldn’t be a walkaway without encountering the reputation economy freaks.
Jackstraw (later Jimmy) is the character arguing for reputation to be an explicit, bankable asset in walkaway. It starts with him wanting to install leaderboards on the Belt&Braces building wiki/repo. Limpopo takes the opposite side. For starters, it does not make sense to claim that the person with the most visible contributions is the person who committed most, because everything we do is standing on the shoulders of giants. In her words:
"The most commits in our codebase come from history—everyone who wrote the libraries and debugged and optimized and patched them. The most commits on this building come from everyone who processed the raw materials, figured out how to process the raw materials, harvested the feedstock.”
This not only makes sense, but is fully consistent with economic analysis. Nobel laureate Herbert Simon noted in 2000:
If we are generous with ourselves, I suppose that we might claim that we “earned” as much as one-fifth of our income. The rest of the patrimony [is] associated with being a member of an enormously productive social system, which has accumulated a vast store of physical capital, and an even larger store of intellectual capital – including knowledge, skills, and organizational know-how held by all of us. (reference – quoted by Mariana Mazzucato in her The value of everything)
Jackstraw appreciates that, but those people are not at the Belt&Braces. In his view, the community should still honor Limpopo's large contribution. But she won't have it, because it would give her, and everyone else, the wrong incentives:
“If you do things because you want someone else to pat you on the head, you won’t get as good at it as someone who does it for internal satisfaction. We want the best-possible building. If we set up a system that makes people compete for acknowledgment, we invite game-playing and stats-fiddling, even unhealthy stuff like working stupid hours to beat everyone. A crew full of unhappy people doing substandard work. If you build systems that make people focus on mastery, cooperation, and better work, we’ll have a beautiful inn full of happy people working together well.”
[...] Getting humans to “do the right thing” by incentivizing them to vanquish one another was stupid.
These statements are important in Walkaway, because they dispose of methodological individualism. The reasoning works like this:
- Most people like building things together. As long as the two elements of building and sociality are present, you do not need to obsess too much about incentives. In practice, you can blackbox individual behavior: observe what they do, then build a model in which they do it. No need to derive this behavior as the equilibrium strategy of a problem. This is a position close to behavioral economics. In chapter 4, Etcetera exemplifies it:
Etcetera felt the tension melt out of his back, replaced with warm purpose. Work needed doing, and he could help. What more could anyone ask for?
- What matters, instead, are technologies for cooperation. Groups of humans that are better at cooperating will prosper at the expense of other groups that are not as good. Groups of humans get better at cooperating by adopting systems of rules that make cooperation easier. Therefore, humans are subject to evolutionary pressure both at the individual level and at the group level, and at the group level the pressure is cultural. This is the interpretation proposed by cultural evolution biologists like E.O. Wilson and Joseph Henrich.
- It follows that an effective economic theory should not focus on individual behavior as an equilibrium of a set of individual incentives, but on system-level behavior as an equilibrium of interaction protocols.
4. "First days of a better nation": the meso- and macro- levels of the walkaway economy
In Walkaway, the Belt&Braces and other walkaway settlements stand in as examples of how the walkaway economy works at the mesoscale. The full-blown, hard SF world of the final chapters stands in as a walkaway economy at the macroscale. The latter is not as well specified, so we ignore it in what follows.
Most readers will probably like what they see: a mixture of extreme personal freedom (no managers, no wages) and effective cooperation. Once you have replaced the "human nature" of economics with the agreed-upon rules of political economy, and methodological individualism and incentives with a behavioral approach and protocols of interaction, these outcomes make a lot of sense. Part of Doctorow's argument is that everyone has direct experience of these outcomes anyway.
This point is, I believe, best made by David Graeber in his treatment of communism in Debt: The First 5,000 Years. The argument goes like this: stipulate that communism consists in adhering to the principle "from each according to their abilities, to each according to her needs". Then, writes Graeber,
Almost everyone follows this principle if they are collaborating on some common project. If someone fixing a broken water pipe says, “Hand me the wrench,” his co-worker will not, generally speaking, say, “And what do I get for it?”—even if they are working for Exxon-Mobil, Burger King, or Goldman Sachs. The reason is simple efficiency (ironically enough, considering the conventional wisdom that “communism just doesn’t work”): if you really care about getting something done, the most efficient way to go about it is obviously to allocate tasks by ability and give people whatever they need to do them. [emphasis mine]
In these cases, communism is simply more efficient. No need to keep scores of who got what for what; no need for currencies, value storage, means of exchange. The overhead is low to the point of vanishing, especially if "the most commits come from history", and most important things have a public good nature, like infrastructure and digital commons. Doctorow clearly thinks this to be the case. Limpopo:
The anthropocene is about collective action, not individuals. That’s why climate change is such a clusterfuck. In default, they say that it’s down to individual choice and responsibility, but reality is that you can’t personally shop your way out of climate change. If your town reuses glass bottles, that does one thing. If it recycles them, it does something else. If it landfills them, that’s something else, too. Nothing you do, personally, will affect that, unless it’s you, personally, getting together with a lot of other people and making a difference.”
So, walkaways build an economy by the simple expedient of making it easy, efficient and pleasurable to work on common projects. Special emphasis is given to the production of public and common goods. This is not necessarily far-fetched, even for economists: Nobel laureate Elinor Ostrom showed that collective choice and institution design can beat "human nature", and ensure long-term stewardship of depletable common goods, with no tragedy of the commons. At this point, the low overhead of communism kicks in and makes them vastly more efficient than anything in default.
An interesting component of efficiency is that stupid shit simply does not get produced. This is because you cannot blackmail people into doing something they don't believe in by leveraging scarcity, so there are no jobs. As Gretyl says:
"As though we need jobs! I mean, if there’s one thing I’m sure of, it’s that I never want to have a job again. I do math because I can’t stop. Because I’ve found people who need my math to do something amazing. “If you need to pay me to do math, that’s because a) you’ve figured out how to starve me unless I do a job, and b) you want me to do boring, stupid math with no intrinsic interest."
Making it easy, efficient and pleasurable to work on common projects is by no means easy. Walkaway contains plenty of interaction protocols meant to make cooperation easier. The bucket brigade concept is presented as a textbook example of how cooperation should work:
Bucket brigades only ask you to work as hard as you want—rush forward to get a new load and back to pass it off, or amble between them, or vary your speed. It didn’t matter—if you went faster, it meant the people on either side of you didn’t have to walk as far, but it didn’t require them to go faster or slower. If you slowed, everyone else stayed at the same speed. Bucket brigades were a system through which everyone could do whatever they wanted—within the system—however fast you wanted to go; everything you did helped and none of it slowed down anyone else. [emphasis mine]
Many obstacles to cooperation are psychological: ego, guilt, vanity. So, walkaways pay attention to defuse these things as much as possible.
One piece of walkaway-fu was to apologize quickly and thoroughly when you fucked up.
The core idea was that radical or difficult ideas were held back by the thought that no one else had them. That fear of isolation led people to stay “in the closet” about their ideas, making them the “love that dares not speak its name.” So lovedaresnot (shortened to “Dare Snot”) gave you a way to find out if anyone else felt the same, without forcing you to out yourself. [A detailed description follows]
Or my favorite: when Limpopo is confronted by Jimmy's militia having taken over the B&B, people suddenly start to hoard stuff, as they are (rightly) worried that it will become scarce under the new regime. So Limpopo makes tea, passes it around and finds in her bag warm clothes to give to people who are less well equipped than she is.
As soon as she shared, the hoarding impulse melted.
This is consistent with Chwe 2009, Communication and Coordination in Social Networks.
5. A (very) new economy
At this point, I think I have made a case that the economics of Walkaway does, indeed, fill our bill of "imagining an economic system completely different from what we have". Human nature is conceived as leaving plenty of space for "programming" societies by educating individuals. The engine of progress is competition between different protocols for cooperating. Individual freedom guarantees efficiency, because people will not waste their time making stupid shit like network-connected 200 EUR garbage bins. The economy of Walkaway produces different things, in different ways and for different goals than the default economy we all live in.
This is highlighted by the uncharitable treatment that economists get in the book. The job of trashing the discipline is given to Gretyl – ironically, a mathematician. Economists owe much of their discipline's fortunes to its willingness to deploy in the justification for the position of the ruling classes ("zottas") at the apex of society:
“Your dad hires economists for intellectual cover, to prove his dynastic fortunes and political influence are the outcome of a complex, self-correcting mechanism with the mystical power to pluck the deserving out of the teeming mass of humanity and elevate them so they can wisely guide us. They have a science-y vocabulary conceived of solely to praise people like your father. "
They are compared to astrologists:
"I think you have to be a mathematician to appreciate how full of shit economists are, how astrological their equations are. No offense to your egalitarian soul, but you lack the training to understand how deeply bogus those neat equations are.”
I don't completely understand this last one. Still. I rest my case.