Monday, October 7, 2013

Reification

Chris Dillow writes:


"In the day job, I point out that the "Mr Market" metaphor can be be misleading. If markets are complex emergent processes, as Alan Kirman shows, prices and quantities cannot be seen as the result simply of an individual's behaviour writ large, and markets are unpredictable.
Such a conception is consistent with Marxian concepts of alienation and reification. In capitalism, said Marx, "the productive forces appear as a world for themselves, quite independent of and divorced from the individuals." Or as Lukacs put it:
A relation between people takes on the character of a thing and thus acquires a ‘phantom objectivity’, an autonomy that seems so strictly rational and all-embracing as to conceal every trace of its fundamental nature: the relation between people." "


He goes on to argue that we shouldn't worry about alienation/reification because a) workers may well enjoy alienated labor and b) there's nothing the government can do about it short of  replacing the market with central planning, which doesn't work.

My take on alienation is somewhat different. I think that something like reification appears in the context of coordination games. Here's a simple one. We each decide  separately and independently whether or not to walk downtown at night. Suppose it's the case that when enough people walk the street, downtown is safe; otherwise it's dangerous . So we get 2 equilibria: We all walk, the streets are safe, so we all walk; or no one walks, the streets are dangerous, so no one walks. Let's say we're in the latter equilibrium:  we have reification if each of us thinks that the reason he/she doesn't walk is that the streets are dangerous. In fact, the reverse is true: collectively, the streets are dangerous because we don't use them. This seems to capture the idea that  without explicit coordination,  we fail to see our own authorship of  social reality. Notice too that the problem still exists in the better equilibrium. Here we get the efficient equilibrium, but to the extent that we see the safety of the streets as a fact to which we respond by walking out at night, we have reification.

Here's another example: Each employer decides not to hire because there is insufficient demand, while in fact there is insufficient demand because collectively employers are not hiring. Or: we run the bank because we believe it will fail when in fact the bank will fail becuse we are running it.

Is reification in this sense a problem?  Well with explicit coordination, we would avoid the bad equilibrium. And the situation could be fixed without coercion and without any sort of Hayekian knowledge problem to contend with. Suppose though that we are in the better equilibrium and yet we have reification in this sense: I think Marx would say it is a problem:  people are confused about their own agency and thus in some sense unfree. I

This might be one rational(or irrational) reconstruction too much, I realize!


3 comments:

Elevennis Anytwo? said...

Hi Mr. Quinn,

I wanted to let you know that this is a very interesting post and on point for what is wrong with economics. It is good to know that Marx was all over the social construction of reality way back then! Thanks.

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