Chapter 6 violation of the sacred

violation of the sacred In 1982, Arthur suddenly discovered that the atmosphere at the International Institute for Applied Systems Analysis was far less pleasant than before.The rapidly deteriorating Cold War reduced relations between the American and Soviet personnel of the Institute to the point where they could only maintain superficial politeness.The Reagan administration, eager to keep Americans from becoming degenerate in their engagement with the evil Soviet empire, abruptly withdrew Americans from the organization.Arthur was sad to leave the institute, having enjoyed working with his Soviet colleagues, it was impossible to beat up an officer in a Habsburg palace, was it?But things turned out pretty well. After finishing his work at the International Institute for Applied Systems Analysis, Arthur went to Stanford University as a visiting professor for a year.At Stanford, his demographic reputation seemed to work in his favor.Before the end of his one-year visiting professorship, the department head summoned him. "What are the conditions for you to stay?"

"Well, I know there's a tenured position vacant," said Arthur.He already had job offers from the World Bank, the London School of Economics, and Princeton, so he knew what to expect. The head of the department was taken aback.Tenured professor is a highly honored position, generally only awarded to the most prestigious researchers.A tenured professor is actually a tenured position. "We don't make tenured professorships a bargain," she affirms. Arthur said: "I'm not haggling, but you're asking me what I want to stay." So they gave him tenured professorship. In 1983, at the age of thirty-seven, Arthur became the head and tenured professor of the Department of Population Studies and Economics."This is the first permanent job I've ever gotten in an academic field," he said with a smile. He is one of the youngest tenured professors in Stanford's history.

This is a memorable moment.In retrospect, it was a rare opportunity, one that he doesn't expect to repeat for a long time to come, although his economics colleagues may have appreciated his work on demography more results, many of whom still seem to find his concept of the economics of increasing returns difficult to accept. To be fair, many economists readily accept his views, and some even show a keen interest in them.But it is also true that his deadliest criticism almost always comes from Americans.Working at Stanford forced him to face that fact. "I don't break a sweat making my point in Caracas, I don't break a sweat making my point in Vienna, but I'm going to suffer as long as I make my point in America. Just hear me say increasing returns It’s possible that a high-rate scenario could happen, and Americans get angry.”

Arthur was puzzled by American hostility to the economics of increasing returns.Arthur knew that part of the hostility was the American love of mathematical formulas.After all, if you've spent your life proving the laws of market equilibrium, the uniqueness of market equilibrium, and the efficiency of market equilibrium, you're not going to be very happy when someone comes up to you and says there's something dubious about market equilibrium.As the economist John R. Hicks wrote in 1939, he was horrified when he saw what increasing returns really meant. "It threatens to destroy much of economic theory."

But Arthur felt that Americans' hostility to increasing returns went much deeper than that.American economists are known for their more passionate devotion to free-market principles than their counterparts in any country in the world.In fact, the Reagan administration at the time was busy cutting taxes, repealing federal regulations, "privatizing" federal services, and generally making free-market capitalist economics a state religion.Arthur later came to realize that the reason why Americans were so enthusiastic about the principles of the free market was that the ideals of the free market had become closely linked with the American ideals of individual rights and personal emancipation.Both ideals are based on the notion that society functions best when people are free to do what they want.

Arthur said: "Every democratic country has to solve some problems. If you let people do what they want, how do you get the overall benefit? In Germany, the problem is solved by everyone focusing on their own. People outside the window. People will come right up to you and say, 'Put a hat on this baby!'" In England they put a bunch of smart people over there running all these things.The British would say: "Oh yes, we have a dedicated Royal Commission chaired by Lord So-and-so. We will have your best interests at heart. Tomorrow there will be a nuclear reactor in your backyard .”

But in America, the ideal is the greatest possible individual liberty.Or, as Arthur puts it, "Let everybody be their own John Wayne and run around with a gun." No matter how far that ideal has been made in the face of reality concessions, but it still has a mystical power in the hearts of Americans. And the rate of increasing returns strikes right at the heart of this mysterious force.If a small accidental event can bring you multiple possible results, then you may not actually choose the best result.This means that maximum individual liberty and free markets may not lead to the best possible outcomes for people.Thus, advocating the rate of increasing returns led Arthur innocently into a minefield.

Well, he had to admit he had been warned many times. In 1980, he recalls, he was invited to give a series of lectures on economic demography at the Academy of Sciences in Budapest.One night, in the bar of the Interstate Hotel in Budapest, he schmoozed with academic Maria Augustinovics.With a scotch in one hand and a cigarette in the other, Augustine Novick was a formidable lady.Several of her husbands were among the best economists in Hungary, and she herself is a very insightful economist, and she is also a very influential politician with a high status in the Hungarian government.It is said that she can eat bureaucrats for breakfast.Arthur saw nothing in that claim to be doubtful.

She asked Arthur, what research have you been doing lately?So Arthur began to tell her enthusiastically about his increasing returns. "It can explain a lot of problems, all these processes and peculiar forms," ​​he concluded. Augustine Novick has a good understanding of what is the philosophy that Western economists should follow.So she looked at him sympathetically and said, "They'll crucify you." "She was right, the period between 1982 and 1987 was daunting. That's when my hair turned gray." Arthur had to admit that he had caused this great pain to himself. "If I had been a person who was loyal to economics from the bottom of my heart, then the whole thing might have gone better. But I am not an economics person at heart. I joined it later. "

But he has the rebellious character of the Irish, and he has no mood to wrap his ideas in a lot of economic jargon and phony analysis in order to please the mainstream of economics.This made him a serious strategic error: when he wrote his first paper on increasing returns for publication in the summer of 1983, he wrote it in plain, plain English. He explained: "I believed at the time that what I was writing was crucial to economics, so I decided to write it in a way that was easy to understand so that undergraduates could read it. I Thinking that all that fancy math is going to get in the way of my argument. And I think, hey, haven’t I already published pretty mathematical papers before? I don’t need to prove anything anymore.”

This is so wrong.If he hadn't figured it out before, he would soon, he said.Theoretical economists use mathematical techniques like the great stag in the forest use their antlers: use them to wrestle one another, use them to establish their dominion.And a stag that doesn't use its own antlers is nothing.Fortunately, Arthur had informally circulated the manuscript of the paper as a working report that fall at the International Institute for Applied Systems Analysis.The official paper was not published for as long as six years after that. At the beginning of 1984, the American Economic Review Magazine, the most prestigious journal in the United States, sent back his paper with a letter written by the chief editor.The general meaning of the letter was, "No way!" When the Quarterly Journal of Economics returned his paper, it said that readers of the quarterly journal would not think that there were any technical errors in the paper, but they would not admit that the paper was wrong. The study described is of any value. After the American Economic Review changed its editor-in-chief, it temporarily accepted the paper he sent for the second time, but it was pushed back and forth internally for two and a half years, and at the same time, the author was required to make countless revisions After that, the manuscript was eventually rejected again.The British Journal of Economics simply replied, "No!" (After fourteen rewrites, the paper was finally accepted by the Journal of Economics as "Technology in Competition" in March 1989 , increasing rate of return, and lock-in caused by historical events" was published as the title). Arthur fell into a desperate rage.Martin Luther King Jr. could still nail his ninety-five articles to the door of the Wittenberg Church for everyone to read.In modern academia, there is no church door, and if an opinion is not published in an official journal, it does not exist officially.Much to his dismay, and ironically, the idea of ​​increasing returns eventually caught on as a sort of movement in economics, and he couldn't join it because his paper was withheld for years. field sports. Take economic historians, for example.They are scholars engaged in the empirical study of the history of technology, the origins of industry, and real economic development.Stanford had a group of first-rate economic historians who were Arthur's original and most ardent supporters.Because for many years, they have been oppressed by neoclassical economic theory.What neoclassical economic theory, if it is really accepted by them, is actually saying that history and economics are irrelevant.Economies in perfect equilibrium exist outside of history.No matter what kind of interference of historical events occurs, the market will always tend to the best choice among all possibilities.A few economists think exactly so.The economics departments of many universities in the United States are also considering abolishing the compulsory course of economic history.So economic historians love Arthur's notion of historical events leading to "lockdowns," the idea that small things can lead to big consequences.Arthur's ideas about increasing rates of return provide the rationale for their existence. No one has promoted this view more effectively than Arthur's colleague at Stanford, Paul David.As early as the mid-1970s, Davy independently published several papers on increasing returns and economic history.But from Arthur's perspective, even David's support backfired.At the National Convention of the American Economic Association in late 1984, David participated in a panel discussion on "What is the role of history?"In the discussion, facing more than 600 economists present, he used the example of QWERTY keyboard design to explain the viewpoint of being locked in by historical events and relying on paths.His lectures were such a sensation that he moved even the most die-hard mathematical economists.There is now a theoretical basis for the argument that history matters. "Boston World" also reported his speech.Arthur soon heard people asking him, "Oh, you're from Stanford, have you heard of Paul Davy's work on lock-in and pathway dependence by historical events?" "It was just awful," Arthur recalls. "I felt like I wanted to speak, but couldn't. My accomplishments were being credited to others. It was as if I was following rather than leading. I felt like I was reaching the end of the road." The attitude of Fishlow and Rosenberg when he returned to Berkeley in March 1987 led to Arthur's mental breakdown, which can be regarded as his lowest emotional point.But it doesn't stop there.He started having nightmares. "Three times in a week I had the same dream. A plane was taking off and I wasn't on it. I thought I must have been pulled off." He began to seriously consider whether to give up economics and devote all his time to Invest in demographic research.His academic career seems to have been reduced to ashes. What keeps him going is his tenacious character.“I just kept pushing, pushing, pushing, trying to convince myself that the academic system was going to have to give in someday,” he said. Turns out he was right.That's exactly how things were going, and he didn't have to wait too long.