Supply Created its own Demon (other things being equal)

What Sandwichman learned on his summer vacation

Back in July, I had a 10,000 word draft addressing the question: why do defunct ideas persist? I was concerned with a specific complex of doctrines in economics that relate to the argument commonly known as Say's Law. My working hypothesis was that the doctrines made sense to those who propounded them because they rationalized and legitimated a repertoire of beliefs and behaviors, not necessarily because they were otherwise coherent, persuasive or empirically supported.

During the course of the series, the original ten or twelve posts have expanded to more than 30 and the word count has probably doubled. I'm not sure to what extent this material documents the "repertoire of beliefs and behaviors" underlying the rationalization. It has, however, probed deeper into the provenance and peculiarity of the doctrinal complex than I had anticipated. The paradoxical nature of the Say's Law - wages-fund -- lump-of-labor triad turns out to be even more convolutedly paradoxical than I had realized. Historically, the lump-of-labor was present at the creation -- of political arithmetic -- but in a more plausible form.

I chose von Kempelen's automaton chess player as the emblem for this series because it symbolizes the hoax, humbug and credulity pervasive in economic discourse on technology and employment. Even a hoax can generate genuine accomplishments. These days a machine can be programmed to simulate playing a game of chess. It can even win. But it still can't play.

The analytical device of ceteris paribus may also be thought of as arising from the operation of what John Pemberton and Nancy Cartwright call a "nomological" machine:

"Because of the way they originate, [ceteris paribus] laws are both local and fragile: they hold just where and when the relevant machine is working correctly. The successful identification and use of such laws cannot be achieved by uncontextual general principles alone, but requires messy contextual knowledge..."

Cartwright's nomological machine functions the way that Big Blue simulates the playing of chess. Each anticipated move and countermove has to be explicitly programmed into it. The general economic laws and ceteris paribus clauses of contemporary economics, however, operate more like von Kempelen's automaton. The theoretical mechanism is for show and the actual moves are executed ad hoc by a human economist concealed within the apparatus.

In his Theses on the Philosophy of History, Walter Benjamin told the story of the chess-playing automaton and concluded with the speculation:

"One can imagine a philosophical counterpart to this device. The puppet called 'historical materialism' is to win all the time. It can easily be a match for anyone if it enlists the services of theology, which today, as we know, is wizened and has to keep out of sight."

That could be updated today to read 'neo-liberalism' in place of 'historical materialism.' The theology enlisted by the neo-liberal puppet is a conservative, authoritarian theology not the messianic, redemptive mysticism that Benjamin imagined.

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A PDF of an earlier draft of the entire series can be downloaded from SCRIBD. The following table of contents lists both the designated SCIOD posts and related posts that weren't formally labeled as such. This is the initial posted draft of what will presumably end up as an articulated hypertext.

1. Supply Creates Its Own Demon (SCIOD): The Serial!
2. You Don't, Say!
3. Marc Andreessen and "Textbook Luddism"
4. Say's Law sank without trace.
5. Pantins' Pantomime
6. One Lesson, Ad Nauseum
7. A Neglected Point in Connection with Crises -- N. A. L. J. Johannsen
8. Paper Mechanisms
9. The Automatic Left-handed Loom
10. Chariots of the Ludds
11. Petty Foggery and Political Arithmetick
12. Theory of the Lump of Labour: "not as simple as it has been supposed to be"
13. Paradox Laws
14. Liar's Paradox
15. Barkley Rosser Cuts Gödel's Mustard
16. Supply Creates Its Own Demon
17. Making Sense of Brad DeLong's "Making Say's Law True in Practice"
18. The Pathos of Aggregate Demand Management
19. A Trick! of the Clumsiest Description!
20. The Frankenstein Factory
21. Common Pools and Wage Funds -- A Reply to Simon Wren-Lewis
22. Robots, again?
23. The Secret Basis of Glut
24. This Magazine of Untruth
25. Autor's Alibi and the Lump of Jackson Hole
26. The Fund-a-mental Thing's Supply As Time Goes "Bye!"
27. Economists: Lawyers? Shysters? Touts?
28. Graunt Work
29. Lump of Labor Day Special: Advanced (Elementary) Concepts in Mathematics
30. Continuation of Brassey by Chapman
31. Euclidean Rhapsodies
32. Beggars, Cranks and Feather Beds
33. Ceteris paribus, Dr. Jekyll tans his own Hyde