Monday, May 11, 2015

Libertarian Paternalism and the Pantomime of the Rational Actor

Harold Rosenberg prefaced his 1949 essay, "The Pathos of the Proletariat" with a quote from Marx, "the working class is either revolutionary or it is nothing." "The hero of history," Rosenberg explained, "was to be a social class, a special kind of collective person."

But this collective person, the Proletariat, is "without human motivation, whether individual or collective." In Rosenberg's view, Marx never explained how an inert personification was supposed to transform itself into the heroic subject of history. When volume III of Capital finally got around to addressing class, the mute reply to Marx's question, "What constitutes a class?" was the epitaph, HERE THE MANUSCRIPT ENDS.

Rosenberg described Marx's conception of revolutionary subjectivity as "un-Marxian" in that it derived neither from political economy nor materialism but from dramatic formulas and imaginative metaphors:
The self-consciousness that converts the class from economic personification into historical actor is not an intellectual comprehension of class interests and relations but is part of the revolutionary act itself. The class engages itself in the drama of history by its passionate and willful poetry of the event [italics in original].
But this modern poetry can have nothing to do with the ecstatic, hallucinatory poetry of the past. The bourgeois French revolutionaries recognized their identity through a re-enactment of ancient Rome. The working class does not have the luxury of such indulgences. They are scarcely motivated to act "until the situation has been created which makes all turning back impossible." That situation constitutes a "growing mass of misery" and worsening crisis. But even that is not enough.Such misery could as easily precipitate escape into fantasy.

To sustain the revolutionary struggle, the conditions themselves must be joined by a remarkable collective act of will, a "readiness to sacrifice itself for the moment alone":
The proletariat must be prepared to die in order to exist and for nothing else. Such appears to be the impasse of truly secular (without ideologies, as well as without myths) historical creation.
The trouble is, until the revolution happens it's all just a hypothesis. And the longer the absence of evidence supporting that hypothesis endures, the more likely it is to be read as evidence against. Here is where things get messy.
Marx... refuses to regard proletarian action as an if of creative hazard. For him the revolution is an historical certainty. From this translation of the dramatic into the "scientific" arise the essential ambiguities of Marxism. ...though he thinks of the revolution as a tragedy, he does not behold its incidents as tragic, and his work lacks the pathetic tonality appropriate to its notion of the workers transforming themselves through constant risk of their lives. The rationalism of Marx's prose... wins against his beloved Shakespeare and Aeschylus. An optimism with respect to the historical drama as a whole subdues the anguish of the hero's striving against utter defeat through which the happy resolution is to be reached. Even in his description of the Commune and its executioners, the peak of his revolutionary eloquence, it is the foes of the revolution that he most vividly evokes.... For him the Commune is a single lost battle in a war that can have but one conclusion. Thus Marx himself prepares the shallow trust of Marxism in rationalistic formulas.
According to Rosenberg, the dilemma for Marxism is that it must either admit the radical contingency of a revolutionary class consciousness, "or it must reduce the situation to a given number of external elements, definable in advance, and thus become identical with what is known as 'vulgar materialism' or 'mechanical Marxism.'" There is no "happy medium" of a foreseeable autonomy."The failure of the situation to give rise to revolutionary consciousness leads Marx and Marxists to a second type of effort to guarantee the revolution: through politics and propaganda."

Politics and propaganda -- or to use more modern terminology, nudge the proletariat into actions aligned with its revealed revolutionary destiny. The comparison I am seeking to draw is with the segue from rational choice theory to behavioral economics. To paraphrase Marx, Homo economicus is either rational or it is nothing. The failure of humans to comply with the standards of rationality prescribed by rational choice theory informs policies "to motivate behaviour change among those who, on reflection, would have liked to have made different choices for themselves." 

From "Nudging, Shoving, and Budging: Behavioural Economic-Informed Policy," Adam Oliver, Public Administration, early view published online 2015:
Thaler and Sunstein use the term libertarian to modify the word paternalism in order to signify that their approach is liberty-preserving. In nudge policy, there should be no burden on those who choose their pre-existing behaviours rationally and thus wish to continue with those behaviours. Therefore, the approach does not allow regulation or bans. The approach is only paternalistic in the sense of wanting to motivate behaviour change among those who, on reflection, would have liked to have made different choices for themselves. That is, a nudge is meant to bring the instantaneous decisions of those who think that their non-reflective actions are irrational into better alignment with their deliberative preferences, and therefore relies on the assumption that deliberative preference is necessarily rational. Thus, the focus is on reducing negative internalities – the longer term harms that people impose on themselves through their own ill-considered automatic decisions.
Libertarian paternalism rules out using significant financial incentives or overt persuasion to change behaviour. The essence of the approach is that behavioural economic insights, such as those summarized above, can and should inform the design of what Thaler and Sunstein call the choice architecture, or in other words, the context or the environment, so that more people make automatic decisions that, on reflection, they would like to make and yet, due to bounds on their rationality and human error, ordinarily fail to do so. 
The concept of libertarian paternalism and its application in the form of nudges has attracted the attention of governments in a number of countries, but none more so than that of the United Kingdom, where a right-of-centre coalition government lauded the apparent promise of the approach to offer non-regulatory inexpensive demand-side solutions to some of the most profound problems in contemporary societies. ‘This new approach’, according to a 2010 government report, ‘represents an important part of the Coalition Government’s commitment to reducing regulatory burdens on business and society, and achieving its policy goals as cheaply and effectively as possible’, Soon after being appointed Prime Minister in 2010, David Cameron established the Behavioural Insights Team (BIT), colloquially known as the Nudge Unit. Whether or not this moniker is appropriate requires an assessment of whether the interventions that were advocated as nudges by the BIT comply with the original requirements of libertarian paternalism laid out by Thaler and Sunstein.
Oliver maintains the term "nudge" has become a popular generic label for "a whole spectrum of policies, some of which are informed by weak evidence bases and others of which are divorced from the original requirements of libertarian paternalism." Some of these approaches Oliver describes as "coercive paternalism" and "behavioral regulation." The parallel with Rosenberg's critique of Marxism suggests we have been here before. It wasn't pretty.
For Engels in 1893 the continuity of the revolutionary movement no longer depends upon the reflexes of a proletariat that has been forced into revolt; it is no longer subject to the intermittences of the heart and mind of the working class.
In order that the masses may understand what is to be done, long, persistent work is required, and it is just this work which we are now pursuing, and with a success which drives the enemy to despair. 
Instead of learning in action, the working class is put to school by the Party; it marches with its will in the secure custody of the leadership. Marching has indeed replaced revolutionary action, the movement which was to have been the source itself of the "alteration" of the workers.
Rosenberg referred to this substitution of party leadership for class spontaneity a "demonic displacement of the ego of the historical collectivity":
As a liberating program Marxism founders on the subjectivity of the proletariat. So soon as it declares itself, rather than their common situation, to be the inspiration of men's revolutionary unity and ardor - how else can it offer itself simultaneously to the French working class and to non-industrial French colonials? - Marxism becomes an ideology competing with others. When fascism asserted the revolutionary working class to be an invention of Marxism, it was but echoing the Marxist parties themselves. If the class as actor is a physical extension of the Party, fascism was justified in claiming that a magical contest in creating mass-egos could decide which collectivities are to exist and dominate history. Moreover, it proved that heroic pantomime, symbolism, ritual, bribes, appeals to the past, could overwhelm Marxist class consciousness. What choice was there for the workers between the fascist costume drama and a socialism that urged them to regard their own working clothes as a costume? In Germany and Italy the working class was driven off the stage of history by the defeat of the Party - in Russia it was driven off by its victory.
Similarly, as an exercise in "libertarian paternalism" behavioral economics founders on its takeover of rationality on behalf of the misbehaving humans. It reveals itself as yet another ideology competing with other ideologies. Instead of misbehaving, we will get marching in time to deliberative preferences. Instead of marching nudged by paternalistic libertarians, we will get marching led more forcefully by parties more aesthetically inclined to "heroic pantomime, symbolism, ritual, bribes, appeals to the past..."

15 comments: said...

Hmmm, Sandwichman, just in case you did not know you are in league with libetarians such as Mario Rizzo and Glen Whitman who have been loudly denouncing Cass and Sunstein "nudge" policies as an evil door to that slipplery slope known as the Road to Serfdom. Yeah, maybe it is foot in the door that may yet get used for all sorts of anti-liberty nastiness, but so far it has been mostly about pretty mild-mannered stuff like nudging people to make wise saving for retirement decision or not smoking or eating less unhealthy foods.

In particular, I have not heard anybody talking about using it to make people work longer hours as you summon up with your quotation from Engels. Rizzo and Whitman have other fears, but I must say that until I actually see some nudger pushing something Awful, I have a lot of trouble getting too worked up about all this.

Of course, I am sympathetic to behavioral economics, mostly because I think it is better at explaining how people, well, behave, than garden variety neoclassical economics.

Sandwichman said...

Incidentally, Barkley, the series isn't finished. The segment I was thinking of for today circles back to an earlier series of posts about media framing and the political economy of communications. Thaler and Sunstein didn't invent "nudging" the p.r. and advertising industry of the early 20th century did that. I don't consider them "evil-doers" I just don't see their approach as some kind of humanitarian policy breakthrough. It's the emperor's old rags.

Thornton Hall said...

Hmmm, BJR writes:
Of course, I am sympathetic to behavioral economics, mostly because I think it is better at explaining how people, well, behave, than garden variety neoclassical economics.

So there's garden variety neoclassical economics and then there's neoclassical modified by behavioral economics. That would be a dismal world, indeed.

Speaking of Communism, this reminds one of China: one country thru thousands of years of history because everytime they got conquered they just turned the conquerors into Chinese.

So if that's the way this works, bring on the Mongols, bring on the Manchu, Neoclassical economics will never die! said...


Your argument is substantially the same as theirs, the only difference being that what you are each worried that the authorities might do with their awful nudging is somewhat different.

Sandwichman said...

"Your argument is substantially the same as theirs..."

Barkley, there is not enough substance in that claim for me to even bother denying. Your reference in your first comment to the quote from Engels indicates a problem in reading comprehension. Maybe you think what I write is not important enough to read and understand. If that's the case STFU. But if you have any substantive comments based on a respectful reading and comprehension, you are welcome to offer them.

Also, you don't seem to notice that my objection to the nudging is not that I think they are evil but that their paradigm will be ineffectual because it is fundamentally contradictory. Can you give me examples of libertarian paternalist policies aimed at nudging better behavior from the wealthy and powerful? To ask that question is to answer it.

(wtf -- the stupid captcha made me call a salad roll a burrito to prove I am not a robot!) said...


I agree that I misread the Engels quote. He is not talking about capitalists nudging workers into working longer hours, but party leaders needing to work long hours to get workers to follow them.

But otherwise, I see your view still pretty much like that of Rizzo and Whitman. You seem to quote Oliver approvingly who worries about "coercive paternalims" and "behavioral regulation" arising from all these supposedly "libertarian parernalistic" nudge policies. This is exactly Rizzo and Whitman, who not only do not want nudging of wealth capitalists, but of workers deciding how to allocate their pension funds or kids inclined to eat junk food at school.

Sandwichman said...

"You seem to quote Oliver approvingly who worries about 'coercive paternalism' and 'behavioral regulation' arising from all these supposedly 'libertarian parernalistic' nudge policies."

I quote Oliver approvingly because I think he raises a valid point, concisely. It's not the most important objection, in my view but it is a valid point. I could care less about Rizzo and Whitman. Haven't read them. The fact that they may agree with something Oliver said is of no significance (especially if you don't even bother to document your broad brush claim with specifics).

For other critical assessments of LibPat, see Will Leggett, "The politics of behaviour change: nudge, neoliberalism and the state." Alan Walker and Steve Corbett, "The Big Society: A Critical Perspective." For an earlier history of Old and New behavioral economics, see E. Sent, "Behavioral Economics: How Psychology Made Its (Limited) Way Back Into Economics."

Sent points out that the "new" behavioral economics uses "the rationality assumption of mainstream economics as a benchmark from which to consider deviations." Wilby claims the nudge "argues that there’s nothing wrong with markets, only with people, and the state’s role is to make people fit for markets, not the other way about."

Sandwichman said...

From "The kindly words of Nudge are Cameron's ideal veneer"

Peter Wilby
Guardian, August 15, 2010

"The Nudge approach isn't always wrong. Sometimes, even the most dirigiste lefties will admit that persuasion is better than outright bans, just as Nudge's authors admit there should be laws against, say, drink driving.

"But "libertarian paternalism" bears the same theological relationship to Friedmanite economics (Milton Friedman was also a Chicago professor) as intelligent design does to creationism. It strips out the demonstrably false aspects of the doctrine and gives it a makeover. After the banking crisis, the belief that markets work perfectly was as unsustainable as the belief that God created the world in 4004BC. Nudge comes to the rescue, proposing ways to make markets work better without directly interfering with them, still less penalising those who grow rich from them. It discusses not the merits of privatising social security, but the best way of doing it. It considers why Americans aren't saving more for their retirement, without mentioning that, for the majority, real wages haven't risen in a decade. The premise is that if people act against their own best interests – by using drugs, eating junk, failing to save or taking out loans they can't repay – it is because of their individual behavioural flaws, not because of poverty, inequality or lack of hope.

"Nudge, though written before the worst effects of the credit crunch were evident, came at a convenient moment for free-market capitalism. It argues that there's nothing wrong with markets, only with people, and the state's role is to make people fit for markets, not the other way about. Cameron's decision to embrace this philosophy gives the game away. Just as Thaler is a sanitised version of Friedman, so Cameron, for all the veneer of compassion and the recruitment of centre-left allies, is a better-scrubbed version of Margaret Thatcher, determined to continue a Tory project that was rudely interrupted 13 years ago."

Sandwichman said...

"It argues that there's nothing wrong with markets, only with people, and the state's role is to make people fit for markets, not the other way about."

Or, in Milton's words, "how to qualify and mould the sufferance and subjection of the people to the length of that foot that is to tread on their necks..." said...

Mario J. Rizzo and Glen Whitman, "Little Brother is Watching You: New Patterns on the Slippery Slopes," Arizona Law Review, .

Magpie said...


"In particular, I have not heard anybody talking about using it to make people work longer hours as you summon up with your quotation from Engels."

I don't wish to interrupt your discussion, but I think there is little misunderstanding about what Engels said in that quote.

The "work" Engels is talking about is political work by party members among the people. Depending on your point of view, this work could be called propaganda, education, indoctrination, organization, conscientization.

Engels is saying nothing more meaningful that this work (however you decide to consider it) is successful.


Sandwichman said...


That's better. I did a Google search and came up with several of their articles featuring the slippery slope argument. But I'll look specifically at this article and give a response. My knee-jerk reaction was that there wasn't enough of an incline in LibPat idea to call it a "slope."

Sandwichman said...

I am "in league with" Rizzo and Whitman when they say, "Our claim is not that slippery slopes are the only objection to the new paternalism." Other than that, our main objections are quite different and -- to some extent -- incompatible. This is not to say that Rizzo and Whitman do not raise some reasonable caveats that I would agree with. They do. But agreeing on some points is not the same as fundamental agreement. I can agree with Thaler and Sunstein on many points as well.

Rizzo and Whitman state that their main problem with the libertarian paternalist framework is that "it defines freedom of choice (and libertarianism) in terms of costs of exit, without any attention to who imposes the costs and how [emphasis in original]." The go on to make it clear that they define choice as corresponding to property and personal rights and public policy as a coercive abridgement of those rights.

In other words, Rizzo and Whitman agree with Sunstein and Thaler's narrow framing of choice exclusively in terms of the cost of exit. This is essentially a marketplace definition of choice, as Albert Hirschman pointed out in Exit, Voice and Loyalty. Neither S&T nor R&W address the other element of choice, voice.

I teach collective bargaining and assign the classic article on unions by Richard Freeman and James Medoff, "The Two Faces of Unionism," which employed Hirschman's exit/voice distinction. But I thought I would go to the original for definitions of exit and voice. Lo and behold! Hirschman address "misbehaving" 45 years ago in much richer terms than the current behavioral economics admits. said...

Looks reasonable to me, S-man.

Magpie, I at least made the point you think we missed in a comment well before you added yours. Not reading closely enough you were.

Magpie said...

My apologies, then