Toward a Sociology of Peace: The Goffman Effect (Stigma)

social-stigma.jpgThere were actually two books written about social stigma, and both had the main title “Stigma.” One has the subtitle: “Notes on the Management of Spoiled Identity,” and the other had the subtitle: “How We Treat Outsiders.” The one that became famous in Sociology circles, while the other was forgotten, was of course Erving Goffman’s timeless classic: “Stigma: Notes on the Management of Spoiled Identity.”

Goffman of course, defines stigma as that chasm between the identity that we put forward to others, and the identity that we really have. When others discover that real identity, then we have a stigma.

Gerhard Falk – one of my mentors at my alma mater, who is a fascinating man, wrote the other “Stigma” book. His book viewed Stigma slightly differently, though still within the realms of a Goffman-esque “spoiled identity.” Falk believed that there were stigmas that were existential, and ones that were achieved stigmas. Existential stigmas were things like disabilities, mental illness, obesity, etc. Achieved stigmas for Falk were things like being an immigrant, being homeless, or otherwise being “deviant” from social norms.

Both books and ideas compliment each other in what I am calling the “Goffman Effect.” I define the “Goffman Effect” more on a macro-societal level: the specific intent and desire of people to turn spoiled identity into a social norm in and of itself on an existential level (à-la-Falk) in the aggregate, leading to institutional normalization.

Where Goffman’s stigma was more on an interactionist level between individuals in everyday life, and Falk’s stigma was more structural, it seems that in today’s “post-factual” world, there is an increasing desire to turn individual everyday life into the structural.

For example, there was a time when being labelled a racist was a huge stigma; a basic Goffman-esque spoiled identity. Someone did not want to be perceived as a racist and tried to cover up his or her racist tendencies. In today’s world, when someone’s racism is brought into the light, it no longer has a stigmatizing factor. It’s simply no big deal. Instead, what seems to be happening is that the person being labelled as racist, not only doesn’t try to cover up the spoiled identity, but tries to redefine the term into a less stigmatizing form (“I’m not really a racist, I just believe in preserving our European heritage”), and then tries to stigmatize the person doing the stigmatizing (“you’re a liberal snowflake!”).

Another perspective is the discourse on immigrants. Today, immigrants are “existentially stigmatized”; but that stigmatization doesn’t end there: the identity of “immigrant” itself is treated as a spoiled identity whether one tries to cover up their immigration status or not.

As well, Sociology, and social science in general is not immune from the Goffman Effect. For example, in most sociological discourse today, all power is hegemony; a domination of the oppressed by power structures. Yet, in various protest movements where the tables become turned, the oppressed become the oppressors, and hegemony reigns again, just in a different form; except Sociology will rarely ever admit that. Instead, social science will stigmatize the out-group as they institute their version of what they think is egalitarian power. Don’t disagree with the masses, or else you will be sent to the Heresy Penalty Box.

Stigmatizing others by itself has become a social norm, as people seek to take their everyday life experiences and turn it into an aggregate. The “Goffman Effect” may be a part of the normalization process of racism, xenophobia, and post-democracy that we face in the world today. If the Goffman Effect indeed is the social norm – the desire for aggregates to spoil other people’s identity within the shifting cultural norms that comes from a racialized anomie, then we will need to rethink the role of stigma, especially on a macro level.

Thus far, the only way that I can see to escape the Goffman Effect is for people to have open and honest discussions of what they want their cultural values to be (the ends), and the systems that they want in place in order to achieve them (the means). This is a process of peacemaking, and by definition, will not be easy, and will necessarily involve power struggles; some hegemonic, and some not.

Posted in Peacemaking, Sociological Theory, Sociology | Leave a comment

Sociology’s Need For An Identity Crisis

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If Sociology (or at least North American Sociology) isn’t having an identity crisis by now, maybe it ought to think about having one. Like other disciplines, Sociology was blindsided by the election of Donald Trump. Unlike other disciplines however, Sociology is sticking to its theoretical guns; the same ones that misfired, and are being melted before our eyes.

It isn’t just Social Movement theory that Sociology needs to reflect on. Questions of a racialized anomie within Durkheimian frameworks come up as well. We live in a society now that is no longer about “right versus left,” but is now “right versus wrong” – signifying a shift in cultural value systems. The ghost of C. Wright Mills shouts in our faces about how: “It’s the Economy, stupid.” Expert people are being freed from the “Iron Cage of Bureaucracy” by being replaced with unqualified people, or just plain getting laid off.

There’s even (what I call) a “Goffman Effect” – where people who engage in social justice are now stigmatized with terms like “snowflake,” “elite” and other forms of name-calling that aren’t so pleasant. There is a “spoiled identity” that comes from not being a racist xenophobe that supports a Social Contract. We see this at our borders now, when American Citizens are asked about their feelings of Trump by border guards. Say the wrong answer, and your identity may be spoiled with a set of handcuffs.

For Sociology, it’s an “Alice in Wonderland,” where down is up and right is left.

One example of Sociology’s complacency I want to point to is this paper that appeared in the Journal of Society (Courser, 2012, open access) of how the Tea Party was not really a social movement, and wasn’t really racialized, because basically, it didn’t fit our theoretical framework of what we thought social movements were – organized. I don’t want to pick on this paper specifically, but rather hold it up as an example of so may Sociologists who wrote about social conditions that weren’t really there – until they turned out to be really there.

Here are a couple of quotes:

“On the whole, Tea Party movement is neither racist nor radical, and its political demands fit within the mainstream of American politics. It is an inchoate demand for representation among a significant portion of the American electorate that feels frustrated and marginalized by what is perceived as an unrepresentative political system. What makes the Tea Party movement distinctive is not its conservative character but rather the lack of political skill and organization amongst its adherents.” (pg. 45)

Yet, a National Tea Party organizer describes the very intricate organization of the movement that is very stratified on the grass roots level. This organizer called it a “movement.” Just because Sociology says it’s not a movement out of theoretical justification doesn’t make it any less of a movement in the eyes of the people engaging it. In other words, if millions of people are participating in something that they think is a movement, then it’s probably a movement.

We also all know that the Tea Party was highly racialized, and is hardly worth citing the (literally) thousands of pieces of evidence to support that.

62 Million voters in America just proved this sociologist, and this social theory wrong. He goes on:

“Despite the focus on conservatism being a pathology of social movements, the depiction of the “radical right” offers little evidence that conservatism is inherently illiberal or dangerous.” (pg. 48)

As we now know, the “radical right” is indeed dangerous and illiberal. Here, the Atlantic takes a long, hard look at the alignment of the Tea Party with Donald Trump. As well, this Sociology Ph.D. Candidate at the University of Pittsburg is wondering the same thing in the Washington Post: that there seems to be a connection between the radical-right, Donald Trump, and the Tea Party.

Sociology needs to have a long hard look in the mirror. The fact is that there has been no new breakthrough in Social Theory for at least 50 years. It seems that as soon as C. Wright Mills and Goffman died, we retreated from theory building based on observation. Instead, we largely have dictated the social conditions of people instead of actually exploring or studying them. Courser, 2012 is an example of that dictating of social conditions of people. The Tea Party wasn’t really a movement – except that it was; it wasn’t a radical-right – except that it was; it wasn’t racialized – except it was.

From Durkheim, to Goffman, perhaps it’s time to go back to the basics of sociology: exploring and studying the ways that societies are organized. Maybe it’s time to have an identity crisis. There’s no question that many of our theories in Sociology have stood the empirical test of time, but perhaps we as a discipline need to evaluate if we’ve thrown babies out with the bath water.

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Leaving Canada out of NAFTA Racializes Trade

With the absence of any mention of Canada from all NAFTA discourse, the idea of scrapping, or “renegotiating” NAFTA has become convincingly less about “trade” and more about the United States having problems with people with brown skin.

This Politico story has some good points; that trade economics always wins, especially in the Neoliberal abyss that distorts the gravity of social institutions. This story however, is noteworthy for its absence of any mention of Canada in NAFTA, and it is not alone.

Canada and the United States are very much economically dependent upon each other. 32 states have Canada as their main export country. There are dozens of American companies in Canada, such as GM, Ford, Chrysler, General Dynamics, as well as several technology companies. Under special NAFTA rules for highly skilled workers, thousands of Americans work in Canada, and thousands of Canadians work in America. The U.S.-Canadian border isn’t just the largest land crossing in the world; it’s also the busiest in commerce. About $45 Billion in Customs declarable goods move across the U.S.- Canadian border every MONTH.

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Canadian labour is cheap too! At current Bank of Canada rates, paying a Canadian $12 per hour CAD is the equivalent of paying $8.64 USD. Canadian labour may not be as cheap as Mexico for U.S. companies, but it’s awfully darn cheap.

Yet, noticeably absent from the discourse are any complaints about Canadians taking American jobs; or American companies moving to Canada. There is no discussion on forcing a 20% tariff on Canadian goods. Under NAFTA, what ever the U.S. does to Mexico, it must also do to Canada – except if it doesn’t under the new U.S. Authoritarian regime.

Any “renegotiating” would have to include Canada. Considering that the U.S. lost a WTO appeal to Canada over meat labelling in 2015, creating unfair trade under NAFTA, and the United States has a $15 Billion trade deficit with Canada (2015 estimate), Canada is likely not going to give up its biggest bargaining chip on trade; especially when a “yuge” part of their economy depends on it.

Separating Canada from the NAFTA discourse turns NAFTA into a U.S.-Mexican trade relationship, which it is not. Putting a U.S.-Mexican trade conflict under the umbrella of NAFTA hides the discourse of white America versus brown people – a racialized other. If it were really about “trade,” we’d be hearing about all of those treasonous American companies moving to Canada and all of those Canadians taking American jobs. NAFTA under the “new normal” is more convincingly less about “trade” and more about race. Considering the topics of the current NAFTA discourse, leaving Canada out almost racializes trade by default.

Posted in Economics, Labor, Political Economy, Race, Sociology | Leave a comment

Atomic Social Science: Post-Positivism versus Anti-Science (theoretical)

Sometimes in science you just have to use your imagination.

In 1905 Albert Einstein published a paper about how atomic particles move through fluids and what happens to molecules when heat is applied. It was the invention of the term “atom” and “molecule.” It was a pure hypothesis that (at the time) couldn’t ever be tested, and indeed, would never be actually observed for over 100 years. Einstein’s untestable theory would win him the Nobel Prize (NOT Relativity).

In 2013, the advances in electron microscopy allowed us for the first time to see at the atomic level, albeit very fuzzy. The picture below is from the U.C. Berkeley electron microscope, that shows a Rubicene (Hydrocarbon) molecule of C26H14 being held together by a Benzene “ring” (C6H6). It’s used in photosensors and solar panels. It essentially says that Einstein was EXACTLY right in his 1905 paper. The full Berkeley findings can be found here.

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An electron microscope view of a hydrocarbon molecule undergoing a reaction to form a Rubicene molecule of C26H14 using a standard Benzyne ring of C6H6. Photo courtesy University of California at Berkeley. Full paper here

Out of Einstein’s untested hypothesis of something that could never be directly observed or tested came the invention of Propane, Butane, and atomic energy, among other advances. Oppenheimer didn’t observe a Uranium-235 atom shedding neutrons, rather he was able to measure its radioactive effects of the things around the atom, and just assumed that it was what Einstein had predicted.

In other words, in natural physical sciences, hypotheses aren’t always tested because they are not always testable. Instead theoretical science tells us that if the theory is correct, then this is what we should look for.

In the Post-Positivism argument, social science either tries to be like physics or runs from it as fast as it can, under the idea that natural sciences always hypothesis-tests things. This is not how natural sciences work. Yes, hypothesis testing is good, but as Einstein showed us, it isn’t everything. Sometimes you just have to use your imagination. Beyond the imagination, as Thomas Kuhn pointed out, sometimes there is no such thing as an “objective” observer. Sometimes we displace Einstein’s atoms as we move through the fluid to observe them.

Instead of the label of “post positivism” in describing the social sciences that run away from the natural science, perhaps the better label is anti-positivism (PDF). Post-positivism does not reject the scientific method, but rather modifies it to include subjectivity. Anti-Positivism completely rejects science. Durkheim, like Einstein started with observable facts, and asked questions from there. Anti-positivism, or “post-modernism” completely rejects the idea of observable facts entirely.

Yet facts are important. It really is true that Benzene rings tie hydrocarbons together. It really is true that African American males are the lowest paid social group in America. It really is true that the sun revolves around the Earth. The gender wage gap really exists. These observations are the same: natural facts versus social facts. No amount of anti-positivist or post-modern theorizing is going to negotiate that the facts really do exist.

The problem for natural sciences versus sub-atomic social science isn’t the math, or the methodology. I think it’s more basic than that. Math is used as a TOOL in the natural sciences to explain HOW things work. Math is used in positivist social sciences to explain WHY things work the way that they do. This is problematic. In one, math is a tool. In the other, math is the end result. The more basic issue is the question of why versus how. Theoretical science can address both, but often doesn’t in the social science.

Just as Einstein told us what to look for in his theories, theoretical social science rarely tells us what to look for. Instead, they tell us “why” we observe the things that they do, without explaining how. For example, in Einstein’s General Theory of Relativity, he gave us within a very definite measure, of what to look for in the universe – the bending of light by space. He said that IF his theory was correct (and it was), then light should present itself in a very specified way. Yet in social science, we observe, and then assign “blame” by assigning a theory to the phenomena.

In contrast, social science theory doesn’t tell us what to look for, or explain the “how” of the phenomena. For example, absolute systems of male power is to blame for the misogyny. Yet, it fails to explain those (growing number of) males who refuse to exercise that power. The natural cycles of the market are to blame for recessions. Yet markets are man-made, and manipulated. Discrimination is to blame for high minority unemployment. Yet African American women have twice as much chance of getting a job than African American men.

That doesn’t mean that these phenomena do not exist – they most certainly do. It just means that the theory isn’t really telling us what to look for, since we already find observable anomalies outside of the theory. That also doesn’t mean that developing a “grand theory” is the answer. It does let us know however, that the way social science “does” theory is a little broken. Social science is trying to explain “why” without explaining “how.” How can theory tell us “why” without explaining “how” large anomalies exists that defy the theories? How can a theory tell us “why” without telling us what to look for?

Whether social science goes toward positivism or away from it, either direction will result in social science being more like natural science, especially where the imagination is used. Social science needs to be okay with the idea that some ideas are not testable – maybe even for a century. More to the point, social science needs to become okay with the idea of not knowing. Where social science cannot go if it still wants to be considered a science, is in the anti-positive (or anti-science) direction, otherwise it will no longer be a science, but rather an ideology. We’ve had a lot of social problems created by ideologies masking themselves as “science” already.

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Toward bringing Science back into Social Science

20151030-CopernicusImagine upon Copernicus’ discovery based on observations that the Earth actually revolved around the sun, if to this day science declared that nothing actually revolved around anything. Yet this Social Science in the 21st Century continuously denies observable social facts, declaring instead that reality as expressed by observable facts aren’t really relevant in the larger theoretical framework. Scientific truth is in the eye of the beholder; reality is relative to [insert theory here].

Granted, Copernicus’ discovery wasn’t without controversy; there were a few witch burnings, and some Heresy trials by the Church. In the end however, science settled on the observable fact that the Earth does indeed revolve around the sun.

This process doesn’t happen in today’s social science. Data as a set of observable facts are required to be “massaged” into an increasingly predetermined paradigmatic box. Part of the result is that there is little agreement on the common definition of social phenomena, such as neoliberalism, social movements, behavioral economics, or even what Fascism is. Analysis of the social world becomes a series of stale paradigms that adds little to social discovery.

During the disputes as to whether or not Pluto was a planet, scientists were at least able to agree that it was a big hunk of icy rock, far, far away that had certain properties. From Political Science to Sociology to Economics to Psychology, ask each what Fascism is, and you’ll get a thousand different answers depending on what paradigm the person leans toward. Post modernists will have a vastly different answer than Marxists, Keynesians, Durkheimians, or those from the “Austria School.” Someone could stand up and scream: “I’M A FASCIST” and have an entire world agree with them, while social scientists would scream back: “NO YOU’RE NOT!’ because they don’t fit their particular paradigmatic box. Pluto is not a hunk of icy rock far, far away.

Scientifically, we know that gravity exists, and has certain characteristics let us know that it’s present. We can’t see gravity – we can’t touch it, mold it, or smell it. We can however measure its effects on other things, and we can “feel” it in our everyday lives. As well, scientifically we know what Fascism looks like. We can’t touch it, or smell it. Yet we know its effects on everything around it, can measure that, and we can even hear it sometimes. And still, despite all observable evidence of its presence and effects, there is little agreement among social scientists on what it is and whether or not it is present. This is the problem of conflating hypotheses with theory, and observation with methods in the social science.

bad-mathScience is the philosophy of discovery. Theory derives from discovery; at least it’s supposed to. When theory does not derive from discovery, when hypotheses are conflated with theories and observations conflated with methods, then it takes away from the human and social wonderment of the process of discovery, be it the natural or social world.

 

The anti “I don’t know” doctrine

As Neil DeGrasse Tyson likes to point out: science stands on the cusp of what is known and what is unknown. As scientists – whether natural or social – we absolutely cannot be afraid to not know something. It is counter-intuitive for science to be afraid of the unknown. It defies the very purpose of the existence of science. It’s not what we know, it’s about what we don’t know. If we know everything already – as many social scientists say that they do (especially the ones that get invited onto news shows), then there is no longer a need for discovery. Humanity cannot escape the confines of its own mind.

It’s important for Social Science to become an avenue of discovery instead of an avenue of hypotheses that gets conflated into theory. Jumping from observations to theory takes away from the discovery process, takes away from the expansion of human intellect on the whole, and leaves humanity with a critical missing piece in the social universe for which we as a species are no better off for. The methodological problem that has turned social science away from science is in part because of the “I don’t know” issue. As soon as social science can humble itself in the face of not knowing, embracing the idea of there being wonderment and awe in discovery of the social world, then it’s possible that the ideological problems within social science will figure themselves out. Until then, observable facts in the social world will stay relative, devoid of truth, and rob humanity of critical knowledge.

The discoveries of the natural world, and the universe are exciting! The discoveries of the social world could be just as exciting if we take some of the scientific steps between hypothesis and conclusion.

Posted in Methodology, Science, Sociological Theory | Leave a comment

An Open letter to Milton Friedman

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Dear Dr. Friedman,

In 1994, you praised Hayek’s book The Road to Serfdom as a “manifesto – a call to arms against tyranny.” Prior to this, you also stated several times that you were advocating not for a 19th Centruy Liberalism – not for Laissez-Faire – but for a “new liberalism” based on active government involvement in “clearing the way for markets.” This would become known as “Neoliberalism.” In essence, you made neoliberalism a social and political movement through the Mont Pèlerin Society that saw success in time, legitimated behind a mask of “economic science.” Fifty years later, you and your movement have largely obtained your goals.

This is not an analysis of the details of your ideas, or how specifically your ideas have impacted the human existence, but rather this is to acknowledge that your social and political movement, largely based on your ideas, have won the battle. This is not something that most in social science are willing to admit. However, perhaps one of the shortcomings of people outside of the Economics discipline face in developing a viable resistance or alternatives to your neoliberal movement is the refusal to admit defeat.

The other purpose of this letter is to ask you two fundamental questions: first is whether or not you realize that your prescriptions for a free society have led to the very things that you stood against, and second, is if you thought your ideas would ever go as far as they did in forever altering generations of the human experience? If I may be so bold as to quote your nemesis, John Maynard Keynes, who said that ideas shape the course of history. Your ideas have in fact, as Keynes suggested, altered the course of human history, as most of your ideas are in practice today.

So many things are privatized to the free market – from childhood education to drinking water to prisons, that it’s very difficult to go back. This is what you prescribed for a “free society.” Unions are on their last dying breath. Government is so proactive in enforcing the “rule of law” as it relates to business contracts and debt markets that it has almost foregone any resemblance of a social contract. The right of markets has superseded the rights of man. The social safety net is completely shredded, and has no hope of being repaired. This is just what you and your cohorts in the Mont Pèlerin Society prescribed.

As well, Sociology as a discipline has largely been relegated so far to the margins that now Economists publish more papers about inequality than Sociology does. Political Science as a discipline has been relegated to mastering poll methodology with economic backdrops. While you and the Mont Pèlerin Society were fighting Marxism, the only response that other disciplines could come up with was more Marxism. That was entirely our fault. The result is that Economics as a discipline has nearly taken over all of the social sciences. Now there is Economic Sociology, Behavioral Economics in Psychology departments, Economics of the Family, Economic modeling in Political Science, and even Economics in the Humanities. There has even been a permeation of Economics in the natural sciences, such as Economic Biology. This is exactly as you wanted it.

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Nearly everything in the Academy that you so loved has become market-centered. From science being skewed to support its private funding, to the pay-walled exchange of knowledge, to students & professors having their freedom of thought restricted to market-based principles, for the first time since Plato, the Academy is no longer about knowledge-production that benefits humanity, but rather a statistical production that benefits markets.

I understand that you and Dr. Hayek viewed any kind of “collectivism,” whether a democracy or socialism as something that leads to Fascism. While you’ll undoubtedly object to my comparing you to Karl Marx, you had your own version of Historical Materialism. With the fall of the Soviet Union, of course we can see that Karl Marx may have been a little “off” in his version of Historical Materialism, but what about your version? In your efforts to end “collectivism,” how has the “free market” and “free society” of your neoliberalism worked? Did it indeed stave off the development of Fascism?

Your neoliberalism came with a lot of promises. Your neoliberalism promised to set us “free.” We would all prosper socially, economically and politically. You acknowledged that there would still be poverty, but you also promised that in that poverty, there would be social mobility; the opportunity for all to “better their lot in life.” Has your promise of a better life for all, or at least the potential for it, measured up in the last 20 or 40 years? Has Fascism been relegated to the dustbin of history? Arguably, no.

Your ideas were picked up by your followers, and carried to even further extremes. Democracy is now open to the highest bidder. The IMF now holds democracies hostage by making sure their citizens suffer horrific death & suffering. The European Union and the European Central Bank have become wholly owned subsidiaries of Germany; who can now effect with finance what they used to effect with armies. Global GDP is up but inequality (distribution and allocation) is out of control.

Capitalism now is quite literally the only game in town on the global stage. As such, we can now arguably say no system of social economics has created more global human suffering over the last 20 years than Capitalism. I’m afraid that your promises of a better life for all under neoliberalism have not measured up.

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With the broken promises of your neoliberalism, comes what Keynes warned about in his Economic Consequences of the Peace.” Countries are so riddled with debt under your neoliberalism, and governments are so eager to enforce your idea of the “rule of law,” that Fascism is on the rise. Fascist parties are only one electoral mistake away from power in Hungary, France and the United States. The United States is seeing the rise of its first proto-Fascist leader ever in its history. The very thing that you fought against through your social movement is the very thing that has resulted from your social movement.

Not all of your ideas were implemented however. Healthcare has been deemed a human right in most countries. Developing nations have declared drinking water a human right; albeit it doesn’t seem to be a right in economically advanced nations. Public Education is hanging on by a thread because people cannot bring themselves to consider education not to be a right for children. In all areas where your ideas were thwarted, it seems to be due to the implementation of a social contract; an idea, and a social agreement that some things that human need for existence is a human right. Those areas were your ideas became rooted – where you succeeded, is a result of the acquiesce of human rights and social contracts.

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This is where the failure of Sociology, my social science comes in. Not only has it been marginalized to irrelevance in policy decisions, but it abdicated its publics. It abandoned the idea that public sociology meant getting your hands a little bloody in the everyday social world. When you were calling for the abolition of the welfare state, Sociology became distracted with the shiny objects of post-modernism. When you were calling for privatization of public goods, Sociology ignored Social Contract theory. When it came to inequality, Sociology decided to leave the heavy lifting to the cohorts in your social movement – the economists. After 40 years of Neoliberal control of society, Sociology insists on responding to neoliberalism with more Marxism, and intersectionality in a neoliberal world culture that is devoid of social locations and class relations. As you eloquently pointed out in your book Capitalism & Freedom, where there are winners, there are losers. Where you have won, Sociology has lost. While you specifically called for institutional arrangements to organize society on a neoliberal principle, Sociology has seemed to given up on studying institutional arrangements as an organizer of society.

Did you think that your neoliberal social movement would go this far, Dr. Friedman? Did you think that others would pick up your torch and move neoliberalism into every crevasse and aspect of society? Or was the advancement of neoliberal ideas forever changing the course of human existence just happenstance? Is the state of affairs in the world – the re-rise of Fascism, the end of knowledge production, the end of social contracts, and finance as warfare – is this how you planned it? If so, how is a planned economy by a collective any different than a planned economy by a few economists in a collective movement?

Where you have won, Sociology and Political Science has failed. Those are the sins that we as social scientists must reflect on, come to terms with, and atone for. It is unclear in the forecasting of human social existence, if the field of Economics will ever have to come to any similar reflection.

 

Posted in Economic Theory, Economics, Markets, Political Economy, Sociological Theory, Sociology | Leave a comment

Homo Economicus and the fail of Sociology

HOMO-ECONOMICUS.jpgWhat if I said that there existed a person, that had no race, no gender, was perfectly rational, perfectly efficient, and has all necessary information to function & thrive in this world? This person also was impervious to society, family, social forces & institutions, and thus had no socioeconomic status. And what if I told you that we were all created in its image? Such a person does actually exist! It’s name (I have to use “it” because it has no gender) is Homo Economicus. It is the basis of all economic thought. All “marginalism” in economic policy is based on the perfectly rational “man” as an individual force.

We all know that people actually do have social locations: they have a race, a gender, a family, that are embedded in institutions. This is what Sociology looks at. Where things tend to fly off the rails in the inequality argument though is where Sociology has one set of “rules” while economics believes in an entirely different set. It’s not that inequality is the result of institutional arrangements in economic life, it’s that institutional arrangements are specifically set up for inequality – because in the eyes of Homo Economicus, everyone really is equal. If institutional arrangements are made based on the assumption that everyone is equal when they are (in fact) not, then inequality is embedded in the arrangement itself.

Instead of economic modeling that accounts for race, gender, and other social locations, economics, through the “spirit” of Homo Economicus simply doesn’t acknowledge the existence of such things. If there is no race, then there can be no discrimination. Since economic modeling is premised on the idea that it describes the way society works, then all people are made in the image of Homo Economicus. And if what C. Wright Mills said was true, that the political is beholden to the economic, then we can now start to see why politicians deny that police shoot black people, ghettos that are predetermined, or unemployment that isn’t the fault of the unemployed. We can understand austerity in Greece, and the re-rise of Nationalism globally. If we want to stretch this a bit further, we can even start to understand why so many politicians (and economists) deny climate change. Homo Economicus would never do something so inefficient as destroy the planet.

Homo Economicus was born after Marx, and from “abstraction”: the desire to generalize, and make things simple for a math equation to describe human behavior. It may have its roots in Adam Smith, but Homo Economicus became a “force of nature” after Marx. This started during the “Marginal Revolution” of the 19th Century, mainly in France – where Homo Economicus was born. It can be (and to some degree, has been) argued that the Marginal Revolution, and the birth of Homo Economicus was a direct response to the Socialist movements spreading across Europe at the time. Homo Economicus manifests itself in such economic discourses as “market forces”, “contagion”, and “natural rate of unemployment.”

There’s no question that western society (especially under neoliberalism) is organized by economic rule. In fact, that’s the point of Sociology – to study how societies are organized. However, it’s stunning how Sociology insists on using the same set of rules to study something that playing by a completely different set. In fact, when this type of Sociology is practiced elsewhere, it’s typically called “ethnocentric.” Studying one culture and asking: “why don’t you do things our way?” without ever asking what is “your way” is the epitome of ethnocentrism.

There is next to nothing in the Sociology (and scant in Political Science) literature about how Homo Economicus came to be: next to nothing on the Marginal Revolution, nothing on the culture (or lack thereof) of Homo Economicus, of the ideology of “free markets” under the rule of Homo Economicus, or on the ideology of Homo Economicus. There is nothing in the literature on the very real organization of society based on a fictional character.

Sociology has spent decades using Marx to try and convince economists that Homo Economicus doesn’t exist while at the same time, leaving Homo Economicus to the economists. The result has been a mystification of the economic by Sociology when most of the founders of Sociology were in fact, studying the economy. The result is that today, when Sociologists study the economic realm, they show signs of trouble understanding things like marginal utility, or the indifference curve. Such ideas end up in the garbage bin of Sociology, with Sociology (rightly) saying: “but this isn’t how the world works.” Sociology is studying the economic reflexively – with its own set of rules, when Homo Economicus doesn’t play by those rules. And while Sociologists may believe that the idea of “marginalism” may belong in the garbage bin, the fact is that most political and economic policy is based on it. In other words, a lot of babies get thrown out with the bath water.

If our society, through its political and economic institutions is going to be organized on the premise that all of society emulates Homo Economicus; that people are acting in their “rational self interest” devoid of race, gender, culture, family or society, then it would seem like a necessary first step for Sociology to actually look at Homo Economicus from outside of its own viewpoint. It’s not that intersectionality doesn’t exist; it’s not that social locations don’t exist; it’s that in order to understand how neoliberalism, economics, and political structures exist in western society, then social locations and social intersections need to be set aside long enough to effectively study Homo Economicus on its own terms. Sociologists need to know the culture and rules that Homo Economicus lives by, largely by learning and understanding economic subject matter. Durkheim did this by “embedding” himself with the Marginal thinkers during the Marginal Revolution before writing his magnum opus (The Division of Labour in Society). Otherwise, Keynes predicted, our capitalist society may fall apart piece by piece, with Sociology never understanding why.

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The Sociology of Repo Swaps: Canadian Kool Aid Edition

Interest rates are the price for renting money. LIBOR rates is the price banks charge each other for renting money. Contrary to popular belief, the 2008 financial collapse was not initiated by mortgage derivatives, it was initiated by Repos, and their swaps. Repos (Repurchasing agreements between banks on short term lending between themselves) are specifically tied into the LIBOR rate. This is why the LIBOR scandal, which now includes the Royal Bank of Canada, is so important and sociologically interesting. If LIBOR was manipulated, then so were repos and swaps, which was the firing pin of the 2008 collapse. And there’s a strange Sociology to it, beyond banks acting badly to make a few (billion) bucks.

This is how repos, LIBOR and swaps work in a simplistic nutshell:

Slide1.jpg

Basically, in this example, RBS makes a loan to both RBC and UBS. But it gives RBC favorable rates, while giving UBS not-so-favorable rates. RBC in turn swaps the UBS loan, pays off its RBS loan, and makes a half percent profit (rent). RBS gets both its 3% and 1% above LIBOR. And UBS gets a better rate (1.5%) than it would’ve otherwise gotten. Everyone wins on the swap – sort of. RBC and RBS make money, while UBS still has to pay rent on money, though at a lower rate.

Since UBS couldn’t change the swap rate, what if it could change the LIBOR rate so that mathematically, it ended up paying NO RENT on money? That’s exactly what UBS did. This is the LIBOR scandal in a nutshell. But it doesn’t end there. The Royal Bank of Canada did the same thing, to pay a lower rate on its repos, and instead of coming out .5% it came out ahead even more. And RBS did the same thing on its repos.

It’s not that banks were cheating the public – it’s all “commercial paper.” It’s that banks were cheating each other. In today’s neoliberalism, the penalties for cheating shareholders are far greater than if they just simply cheated the public. Which is why if the Royal Bank of Canada pays the 3x fines for it’s role in the LIBOR scandal, it would be bankrupt.

Canada has a similar program as the United States in the role of the FDIC. When a bank goes bankrupt, it’s taken into government receivership, and the “bad” parts” are stripped from the “good parts” to assure that depositors get their money back. The legal and philosophical question is: would, or should a government take a bank into receivership because of a foreign lawsuit? That’s the question that the Royal Bank of Canada’s part in LIBOR forces on the Political Economy front.

Here’s where the strange sociology comes in: not only did it take an institutional interaction for the LIBOR scandal to take place – multiple interactions between institutions, but it’s also something that banks have forced onto the general public – the United States from 2000-2008 and Canada today. Other than time and volume, there is little difference between repo swaps and debt consolidation.

Debt consolidation loans and balance transfer credit cards are similar to repo swaps, only on a longer term. If you have a stack of credit cards with balances (essentially, loans), then you can “swap” them out for one credit card at a lower interest rate. The same holds true for debt consolidation loans. Certainly banks encourage this. Banks get paid back at their original “rent” rate, and the consolidation bank get a cut. Meanwhile, you’re paying a lower interest rate than you otherwise would have. Except you cannot manipulate the “prime” interest rate.

What may work for institutions however, may not be in the best interest of everyday life. With Canadian household debt-to-income ratio now 165%, a majority of Canadians no longer believe that they will be debt-free in within 25 years. The same happened in the U.S.

Why doesn’t the Sociological Kool Aid of repo swaps work in the real world? That’s a complicated answer that involves income guarantees (or the lack thereof), institutions outliving people, to a few things in-between.

Mortgage derivatives came into play because when banks loan each other money in repos – even if it’s for overnight, they have to have collateral to back it up. Many banks used Mortgage Backed Securities from Bond markets, which were seen as “safe” assets for collateral. The problem was of course, that they weren’t. And when it was found out, banks stopped loaning each other money, which caused a run on investment banks, which…well, everyone knows the rest.

The original role of debt was to move capital (or income, or money) faster through the system that actually created wealth – albeit unequally. If you needed to buy a machine for $20,000 for your factory while you waited for your customers to pay $100,000, credit was helpful for the business enterprise. That machine created profit in the long run, and short-term debt facilitated that. Instead, through the practice of repo swaps (which started in the 1980s), where one debt is simply swapped for another, debt somehow managed to be considered wealth – and that message was passed along to the people through easy consumer credit.

The Sociological Kool Aid is that belief that debt is good, without actually saying that debt is good. Debit is (of course) NOT good. While consumption has been fueled by debt over the last 40 years, there is one economic social fact that is clear as day which came out of the 2008 crisis: debt never created wealth. Debt is not wealth. This social fact holds true across all people, all societies, and all institutions. Debt is not wealth whether you’re a bank, or a wage-worker.

Whether or not Canada’s central bank will step up to the plate to bail out the Royal Bank of Canada cheating shareholders – should it need to, is quite another sociological and economic quagmire.

 

Posted in Economics, Markets, Political Economy, Sociology, Uncategorized | Leave a comment

The Beatings Will Continue Until Confidence Improves

Three economists with the International Monetary Fund just released an article (PDF) citing that Austerity and Privatization, two aspects of the neoliberal agenda, are really bad things for economies. This is not all that shocking, as the data has supported this conclusion for the last 30 years. What is shocking are two things: first is how narrowly constrained the research was, which led to the same conclusions, and second was that the IMF has no intention of reversing its market-sponsored violence against people policy (also known as austerity).

The article reduces the neoliberal agenda to two main items (there are arguably more in real life): open competition, primarily through deregulation of financial markets that allow international capital to flow, and austerity. The report concludes that these policies will increase inequality, lower employment levels, decimate human capital, and all kinds of other “social costs.”

Without getting into the nuts & bolts of how the IMF operates, their main (stated) goal is global economic stability through “helping” countries that are in trouble, with loans (this is obviously a watered down version of the IMF mission). The idea of the IMF loans is this: lower debt-to-GDP so that global investors can be confident to invest in those countries, loosen regulation, get “big government” out of the way, and let the “free market” do the rest.

Yet when we look at the IMF bailouts of the main players since 2008, not only have none of them actually reduced their debt, they have exponentially increased due to IMF loans.

IMF debt.png

It makes sense that a country that is taking on loans takes on debt, but if the IMF’s stated purpose is to make debt less, then no country that has taken IMF loans has actually reduced their debt. Ireland is a significant example, because while Ireland has “recovered” for the most part, they have not been paying down, or haven’t been able to pay down, their debt to the IMF.

Here’s the catch of the article: the IMF analysis only applies to healthy countries. What’s good for the healthy goose, in their view, is not good for the starving goose.

The result is that the IMF, as a condition of the loan, gets to circumvent democracy, and make demands on countries that assure that the beatings will continue until investor confidence improves. It is not so much a Foucauldian Governmentally, where the subject is beaten for crimes against the Sovereign market – it’s about the Invisible Hand Jive that turns into an invisible fist.

Posted in Economics, Macroeconomics, Markets, Political Economy, Public Policy | Leave a comment

Quantitative Literacy: The Philosophy of Math (no math required)

bad-mathAs a society, I think we’ve all been conditioned to think of anything mathematical as “truth.” After all, if I have 2 apples, and I eat one, then I only have 1 apple left. Who could argue with that as truth? But what if I have 2 apples, and 2 oranges, and decide to eat an orange instead of an apple? Why did I choose the orange? What if I chose an apple? Were there social forces behind choosing the orange over the apple? What is the likelihood of my choosing an orange over an apple in the future? Now the “truth” is not so clear, and as even mathematicians point out, math is very much about philosophy.

The typical response I get, even from the Academy when it’s discovered that I hold an advanced degree in Economics, is along the lines of: “Oh, I can’t do math.” The fact is that 99% of Economists don’t actually “do math” (except as a prerequisite in Grad School). Economists largely, “do” 2 things: regression modeling and accounting. Neither of these fall in the realm of “math as truth,” and instead fall into math as a philosophy – that admittedly, gets peddled as “truth”, largely by Economists, knowing full well that what they are actually “doing” is philosophy (sometimes a euphemism for ideology).

Then there is the other side of the fence – the masses in society who have drank the Kool Aid in believing that just about anything involving math is “absolute truth.” There is a distinct difference between social activities that involve math, and social activities result in  math. The orange and apple example involve math. People moving from the east to the west to find jobs is a social activity that results in math (labour data, demographics, GDP, etc). In neither case does this describe absolute truth.

So there are a few rules to what I call the “non-math”, or math as a philosophy versus math as absolute truth that apply. This is especially true in what Market Economists and Finance specialists do, which is largely regression modeling (including DSGE models. More on that in a minute).

  1. All regressions rely on statistics.
  2. All statistics happened in the past
  3. Math is 2+2=4.
  4. “Non-math” is: 2+2=the coefficient of the variables used, at the intercept point
  5. It is not humanly possible to account for all variables (DSGE modeling).
  6. All forecasting models use 1-5, and are only as good as their variables

The philosophy of math is about the social constructs that we build around variables. Why are apples and oranges my only variables? What if in reality, I had the entire produce department from my local supermarket at my disposal? Would I only have one substitution choice out of hundreds of fruits if apples were out of season, or the price too high? What if a hurricane came and destroyed my stock of apples and oranges? These are the types of things that DSGE models try to answer, by tossing in every variable in, including the kitchen sink.

There are 2 main problems with DSGE models: 1) they have been historically horrible at predicting natural disasters, even though there is a variable for that. 2) they have been horrible at predicting human social behavior based on social constructs. Two examples come to mind: the 2008 Financial Armageddon, and the Hurricane Katrina in New Orleans. DSGE models were front and center as a method, and the fate of people’s lives were at stake.

This does not mean that modeling is useless. The best example of regression modeling can be found in Climate Change science. Using past data to predict future results in climate change has actually been pretty accurate. Katrina was the exception, and since then, climate scientists have tossed out the variable, and shifted to the statement: “storms will be worse than in the past.” That’s a pretty accurate statement! This is also in the realm of “natural sciences” which tends to be more accurate anyway.

Within social science, the best regressions can tell us trends that happened in the past, only up to the present time. For example, we know from regression models that the longer it takes for unemployed people to find jobs, the more likely it will be that they will stop looking for one. This is useful for policy, social safety nets, and digging deeper into issues such as discrimination. Forecasting though, predicting the future, has been underwhelming in its accuracy.

And then there are things that models cover up, instead of reveal. The best example is the gender unemployment gap versus the racial unemployment gap. While it is a “social fact” that women make less than men, in the United States, they still have a better chance of employment at all versus African Americans and Hispanics. Sociologists love to point out that being a black women in America is infinitely worse than just being a women, but it’s still better than being a Black man in America:

Gender

We can model this chart! But both Sociologists and economists rarely do. So while models told us that gender was an issue in the labour market, and that gender coupled with race was also an issue, it covered up the fact that there is inequality in labour markets within groups as well.

The philosophy of math actually has little to do with actual math. The philosophy of math is more about  methodology. Perhaps it is time that both academics and the general public to stop being afraid of the math that’s actually “non-math”, and stop accepting the “non-math” as absolute truth.

Posted in Econometrics, Economic Theory, Public Policy, Race, Socioeconomics, Sociological Theory, Statistics, Uncategorized | 1 Comment