Archive for the ‘theory’ Category

While I’m on the subject of Diego Gambetta, without formally reviewing his book, Codes of the Underworld does explain an interesting case from the blogosphere. You may remember the two Italian academics who sent a paper to Medical Hypotheses, the famous journal with no peer review at all, which argued that calling Down’s syndrome patients “mongols” was entirely sensible, because they liked handicrafts, sat crosslegged, and ate foods high in monosodium glutamate.

Gambetta expands on the politics of selection for academic careers in Italy; promotion depends on favour, that of the small group of professors who sit on selection committees, in competitions that are held rather infrequently. These people are statistically likely to have a far poorer record of publication than either the average, or the people whose claims they had to scrutinise. Crucially, the candidates who actually got tenure were actually worse than those who didn’t. The explanation is that the appointments depend on long-term reciprocity between the selectors, and that therefore any attempt to make progress yourself would destabilise these understandings, which would be the worse for everyone. So would promoting the brilliant to posts that might lead to a professorship.

Therefore, it’s always best to pick the dullards, and to be dull yourself. That way, you’re no threat, and therefore reliable in promoting your friends’ clients.

Now, we can understand what was going on with Federica Mafrica and Vincenzo Fodale of the University of Messina’s Department of Neurology, Psychiatry, and Anaesthesiology. For some reason they needed to signal their incompetence with unusual force. They needed to get their crazy on all night long. But why? Which selection committee were they on? Fodale, at least, was on the scientific committee for his department and several others.

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Stability

Bruce Sterling quotes a study into state failure which – counter-intuitively – puts Iceland and Canada at the top of the list of stable polities. It’s worse than that, though; they reckon Hungary is superstable , and they’re in the middle of an epic bank-currency-credit-mortgage crisis which has metastatised into a panic call to the IMF.

But perhaps it makes more sense than that. Despite Iceland’s spectacular financial panic and sovereign bankruptcy, despite Canada’s critical segmentation fault on the distributed queenship node, nothing very terrible has happened. The social fabric holds. Rival mortar teams do not exchange fire over Parliament Hill, the citizens of Reyjavik are not fighting with sharpened CDs over the last can of dog meat.

Perhaps that phrase, the social fabric, ought to be thought of differently. It implies threads straining over some sort of appalling national gut, bulging with the blows of irreconcilable interests, or rotting in the depths of a public crotch out of pure sin. What if it was the wind that tries the social fabric? When it’s just on the point of flapping you know you’re sailing to windward at optimal efficiency, thrashing forward under the gusts.

After all, what does the word stability mean? Stability isn’t immobility or size or mass; it’s an active, agile thing. A stable ship is one that rolls back onto an even keel after being knocked down; a stable aircraft will tend to trim correctly if you take your hands off the stick. A stable operating system will catch and handle errors rather than crash. A stable personality is someone who is capable of recovery from trauma, not someone who is incapable of emotion.

And usually, stability is actually in opposition to authority; try to design a ship that never rolls, and you usually have one that will be a floating hell in a real storm. Try to design such an OS, and you have… Everyone who thought that the best army would be the most obedient has lost since the Napoleonic wars.

Upshot; we need fewer Stability Pacts and more stable control loops.

Reduced blog; I’ve been working on a version of FixMyStreet for Symbian S60 devices.

If you want snark, how about this? I always thought that the BMW not-minis were telling in themselves. Objects are an ideology made manifest.

The original Mini was a minimal car, one designed to be even cheaper than the ones sold to the workers in the factories that made them. Beyond Ford. As a side effect, it was also light, beautiful, and efficient in space and energy.

The “New Mini” is absurdly large, by comparison – it’s not that much smaller than a 3-door Land Rover Freelander, which is reasonably sensible despite being aesthetically an SUV. The Freelander was, after all, reasonably sized, space planned to carry a load, engineered to work off-road, and driven by a highly efficient turbo-diesel engine. Perhaps not coincidentally, it wasn’t pretty. The BMW Mini, however, is a mass of gratuitous placky bits. Over the last ten years, we have lived in the era of gratuitous auto design; I grew up with cars that were advertised on their drag coefficient and their fuel consumption, but not long after I was legally allowed to drive, there was this weird rococo decadence of trucks without ground clearance.

At the same time there was a binge on property, which swelled outwards where there was land enough, and inwards in crappy construction and natural gas-guzzling, and which swelled even more in price where the land wasn’t available. Foxtons’ fake-neat cars were part of the performance of the property binge; speculating in property was meant to feel subversive and young. You doubt? Look at the arse-awful fake graffiti sprayed on them. Fake art on fake coachwork on a fake economy for fake people.

What would fit? Perhaps, if they go down, there may be a supply of “New Minis” going cheap. Maybe I should apply for an Arts Council grant to stack up 20 or so of them in Trafalgar Square and topple them, using a Chinese-made bulldozer. We could beat them with our shoes and torch them with gallons of bioethanol, or maybe homebrew high-test peroxide.

Here’s an interesting scientific paper about Palestinians and Israeli settlers. The experiments asked each group questions intended to judge how willing they were to compromise. Then, they asked the questions again, but threw in a side-offer, for example of economic aid or third-power security guarantees.

Interestingly, all the groups split into two identifiable types; some weren’t happy to compromise but thought they could do so, some rejected any compromise outright. The really significant result, however, is that the no-compromise group responded very badly to the offer of a side payment – it just made them angrier and more intransigent. Only a dramatic sacrifice of symbols by the other side would induce them to change – exactly, as it happens, the sort of thing the compromise group wouldn’t think of doing for fear of what the non-compromisers would say.

I wonder if it would be possible to re-analyse the results using Robert Altemeyer’s tests of social authoritarianism and dominance? It feels intuitively right; more formally, an intense concern with symbols and symbolic norms would seem to be very similar with the obsession with the preservation of hierarchical norms Altemeyer identified among his authoritarian subjects.

It also fits with a lot of the language of extreme conservatism through history; the idea of the corrupting nature of compromise and of democracy, especially of parliaments, and its opposite, the cult of the decision embodied in the leader, has been around since the counter-enlightenment.

This does, of course, point out a deep ambiguity – we admire principle but also reasonableness, which must mean the ability to ignore it.

Further question; remember Chris Lightfoot’s analysis of the Political Survey results? Chris selected the statements from a survey which maximised the variance in the population’s answers to them and used these to summarise the results on two axes. This is one of the axes:

  • Sense Statement
  • agree Prisons are too soft on criminals
  • agree The UK should withdraw from the European Union
  • disagree Most immigrants are beneficial to the UK
  • agree Some crimes are so serious that the only proper punishment is the death penalty
  • disagree It’s more important to rehabilitate criminals than to punish them
  • disagree The government should give more aid to poor countries
    agree National law should always override international agreements and European directives
  • agree Working people pay too much tax
  • disagree The cost of living in the UK should be allowed to rise in order to fight global warming
  • agree The government is mostly interested in helping itself, not ordinary people

The people surveyed broke by vote into two well-specified groups on this axis; one encompassed the Labour, Liberal, Welsh and Scottish Nationalist, RESPECT, and Green voters, the other the Conservatives, BNPers, ‘kippers and Veritas voters (if any measure of them can be considered statistically significant). Now, I would suggest that for a lot of the latter group, the last but one question isn’t really a stereotype-rationalist one about negotiating costs and risks but an identitarian one about not being a *refined shudder* greenie, which means that only the tax one can be considered as a question of compromise.

Well I didn’t expect that – it looks like the Canadians have found a rather serious exploit in Westminster 2. And as far as I can tell, it probably affects Westminster 1 through 3 as well. Yes, we’ve got a class break on our hands!

Now, to understand this we need to realise that a very important part of the constitution exists only as a letter to the editor of The Times. Seriously. An anonymous letter to the editor of The Times. I am not joking. The procedure I described in the last post rests on the so-called Lascelles principles, which were laid down in the early 1950s by the King’s private secretary, Sir Alan “Tommy” Lascelles. Here is the text.

To the Editor of The Times

Sir,—It is surely indisputable (and common sense) that a Prime Minister may ask—not demand—that his Sovereign will grant him a dissolution of Parliament; and that the Sovereign, if he so chooses, may refuse to grant this request. The problem of such a choice is entirely personal to the Sovereign, though he is, of course, free to seek informal advice from anybody whom he thinks fit to consult.

In so far as this matter can be publicly discussed, it can be properly assumed that no wise Sovereign—that is, one who has at heart the true interest of the country, the constitution, and the Monarchy—would deny a dissolution to his Prime Minister unless he were satisfied that: (1) the existing Parliament was still vital, viable, and capable of doing its job; (2) a General Election would be detrimental to the national economy; (3) he could rely on finding another Prime Minister who could carry on his Government, for a reasonable period, with a working majority in the House of Commons. When Sir Patrick Duncan refused a dissolution to his Prime Minister in South Africa in 1939, all these conditions were satisfied: when Lord Byng did the same in Canada in 1926, they appeared to be, but in the event the third proved illusory.

I am, &c.,

SENEX.

April 29.

It should be clear enough that a Prime Minister who loses his or her majority and can’t immediately restore it doesn’t automatically get another chance at the polls. This is necessary, in order to observe the principle that the will of the people is expressed in a Parliament they elect.

Now, it’s also clear that this is a weird kind of constitutional text. Some of its features are obviously bound by context; the bit about the national economy would seem to give the monarch a bizarrely large role in Treasury policy, but this is very much a document of its time, a time of menacing war debts, a fixed and overvalued exchange rate, the Sterling balances, and whatnot. According to Peter Hennessy, this principle has been dropped from the Cabinet Office file some 30 or more years ago.

And of course, it’s weird that Lascelles should choose to express himself in this way, rather than issuing a statement, getting a legal opinion, or asking the Government to put the matter before Parliament. Perhaps he found it so obvious that it didn’t need a more formal statement? Or so controversial that he didn’t want to go on the record? But then, why did he go public at all?

I don’t see any reason to think that the Canadian parliament is unable to do its job, or that it no longer represents the electorate. Further, it evidently has another candidate, and written assurances to that effect. And although the Lascelles principles are a British document, they are based on Canadian precedent, so you can hardly deny they have standing. It seems there has been a grave LDQN error – can they really have allowed a prime minister just to get rid of parliament because he doesn’t want to lose?

But ha. Harper didn’t ask for a dissolution, but only prorogation, and Lascelles doesn’t make any mention of prorogation. Here’s the bug. Is there any way to stop a PM from proroguing again, and again? Is there, in effect, a way of getting root access to the executive?

This is especially interesting for a number of reasons. There have been various Acts of Parliament recently that strengthen the ability of the executive to govern by itself, notably the Civil Contingencies Act, which contains powers which almost amount to rule by decree. If it’s possible to kill confidence votes by proroguing for any or no reason, a malicious PM (or actually almost any other cabinet minister, having first invoked the CCA) could declare an indefinite state of emergency with the help of a weak LDQN. And, at some point in the near future, we’re going to replace ours. I’m fairly confident in the current one, but the likely replacement is both flaky and given to statements a lot of people consider unsuitably partisan.

It’s high time to legislate for the whole mess.

Alternatively, if a letter to The Times can be part of the constitution, surely so can a blog post? Perhaps I’d better get in there first – it’s the only way to be safe. Let’s just say that prorogation exists to do two or maybe three things. The first is to send the MPs on their summer holiday. The second is to start the dissolution process. The third is to stop Parliament if for some reason it’s utterly impossible for it to meet.

The first we can surely leave to the Speaker. The second we could simply roll up into dissolution – it doesn’t do anything useful. The third, well. In 1941 the German air force wrecked the Commons chamber, but the Commons reconvened over the road in Church House. Obviously we need some contingency planning, but we don’t need a way to get rid of Parliament altogether.

This arse-awful gaggle of crap by Simon “Craven” Heffer has already been effectively fisked by Dave Osler among others, but I reckon there’s still some unexploited stupidity in there to be had. It’s actually even worse than this one.

Basically, this article is an example of what Islamists would call takfiri thinking; takfiris are an especially crazy and extreme version of Wahhabist jihadi, who believe that the millions of other Muslims around them aren’t really Muslims, and therefore are even worse than the crusader scum, the Jewish parasites, Shia apostates, etc etc. From this they conclude that they’ve all got to go. Now, if you need someone to drive a car packed with explosives into a police station, they’re your boys; but unfortunately for you, they also have a tendency to turn on all your friends as well. This is roughly what happened in north-central Iraq over the last few years – the NOIA groups, like the 1920 Revolution Brigade, started out by being delighted at the steady supply of Saudi idiots with bags of money and a hankering to blow up, but found the buggers started to take over, chopping off heads and trying to decree weird laws.

So they very sensibly sold them to the Americans. Now, the word “takfiri” means something like “excommunicationist” or maybe “denouncer”; one who wants to purify the community by drumming out everyone who doesn’t agree with him as traitors. So what can we make of something like this?

For the Government to take stakes in our leading banks in order to re-capitalise them is not quite the sovietisation of Britain, but it is a pretty good start. Given the instinctively socialistic leanings of our Prime Minister, it may well have been a move he undertook calmly and, quite possibly, with a little excitement.

The sovietisation of Britain? Christ. It wasn’t so long ago that this would have been equivalent to an accusation of treason, and I suspect in Heffer’s mind it still is. Did you see what I just did, by the way? I used an argument based entirely on my own claims about someone else’s private thoughts. Quite possibly with a little excitement. Does it get any better?

By the 1970s the inevitable endgame of socialism was being played out: unions battling with government over rates of pay, prices and incomes policies, food subsidies, the three-day week, the winter of discontent. The state had to create jobs because there was precious little incentive for the private sector to do so. Investment was scarce. The state was everywhere.

The maxim of the American writer and philosopher Ayn Rand came close to fulfilment before the denouement of Old Labour on May 3 1979: that the difference between a welfare state and a totalitarian state is a matter of time.

Oh. You just accused half the political spectrum of being as bad as Nazis or Stalinists. So no, it doesn’t get any better. The whole point of Heffer’s Tory Takfir is clearly visible here – it’s to shift as much of the domain of legitimate debate over the line into the illegitimate, to excommunicate as many people to his left as possible, to demonise and menace and denounce. And, as always, we’re asked to look for the secret enemy among us – Heffer takes care to include all previous Conservative governments in the general smear.

I’m not going to bother with the substance, such as it is; it’s merely a selection of more or less dishonest strawmen and scare-stories. Britain between 1945 and 1979 was a poverty-stricken desert where the dead went unburied, evil socialists caused national bankruptcy in 1976 (but the finances being so dire as to give the IMF a veto on UK foreign policy in 1956 was apparently peachy), the 70s energy crisis was all Harold Wilson’s fault but the 80s oil bust was entirely Thatcher’s own work, and this comment has already summed it up very well:

Well, at least one thing is back to normal. Mr. Heffer has reverted to his usual excellent form after his brief lapse into constructive thought yesterday.

Not a word about the merits or demerits of the bailout versus *not* bailing out the banks. Goodness no, that would require judgement. Let alone any recommendations along the lines of “Liberty” and “Anti-Statism”. That would require intelligence, insight, and courage.

No, I know a better strategy (Mr. Heffer knows it too by the way). Simply fill a few pages with gripes and moans while pointing out the (glaringly obvious) disadvantages of bailing out the banks, and no-one will ever be able to fault you. You were merely commenting on government action and voicing sensible caution.

If, on the other hand you wrote something substantive you could be faulted the day after tomorrow. Can’t have that, right? Better safe than sorry.

But what, you ask, did I expect? The man’s an idiotic blowhard, an egregious right-wing hack, a factual counterindicator of Kevin Hassett proportions. Here’s the point, though – the politics of denunciation and excommunication is everywhere (even here) at the moment, and Heffer is in it up to his neck, and ignoring it just lets them grab hilltops.

Well, I never imagined Robert Mugabe’s new survival gambit would be just to pretend it wasn’t happening. But it does permit us to answer the question of just how small a state can get and still function; to be clear, I don’t mean a state in the juridical/diplomatic sense, but rather in the political, realist sense. The Grand Master of the Knights of Malta’s house in Rome has some diplomatic privileges, probably because nobody cares enough to change this. But Mugabe’s continuing occupation of the office of president of a political entity called “Zimbabwe” certainly does have consequences; specifically that while he’s in there no-one else can get in. This has fairly serious negative consequences for Zimbabweans in general, and also for anyone who believes in the principle that tyrants should be held responsible, as his residual occupation of the presidency gives him non-trivial bargaining power.

As far as we know, he’s closeted in Government House with a small group of officials, notably including military leaders, political thugs, and the governor of the Central Bank, who has the keys to the remaining foreign exchange and knows how to start the printing press. Noises are being made that the military will not “fight the people of Zimbabwe over election results”; that might mean they would fight over something else, or else define the targets as something other than the people of Zimbabwe, or it might mean the army is unwilling to take any action.

Other than, presumably, protecting Comrade Bob himself. A few weeks ago, it emerged that the political entity known as “Chad” actually extended precisely to the radius of action of an Mi-24 helicopter based in N’Djamena. But now, it appears that “Zimbabwe” in the political sense consists of Government House, the central bank, and a small field of fire around them, and the numbers to Robert Mugabe’s bank accounts. Not even the top level domain or the corporate or aircraft registry.

The obvious answer to this is secession; make local arrangements, set up a shadow administration, and simply ignore them right back.

I don’t like the “contraction and convergence” approach to stopping climate change.

Why? Well, I have a number of reasons. C&C states that we should set a global CO2 target lower than present (contraction), and that poor countries should be allowed to expand up to it while rich ones cut down to it (convergence). The argument is that everyone should have an equal CO2 ration.

What’s wrong with that? Well, it takes care of equity but does nothing for efficiency. On this classic policy trade-off, it goes 100 per cent for equity. This is a really serious problem; if we are to fix the problem, it’s important to think about who can save CO2 fastest and cheapest. This feeds into a second issue: C&C assumes that CO2 emissions are actually good.

Yeah, it’s counterintuitive; Mayer Hillman, the plan’s inventor, is as dark green as they get. But it assumes that people actually *want* CO2 – that it’s something people choose, rather than an unpleasant byproduct. As Amory Lovins says, people don’t want energy, they want cold beer. I have no desire to emit CO2. If the choice is available, I’d rather not. But C&C works on the principle that it is only possible to prosper by increasing CO2 emissions – hence the imperative need that they be shared equally.

Anyway, back to efficiency. Imagine you’re in a lifeboat that’s taking on water. You need to bail the water out faster than it comes in. In the boat with you is a fat bloke who refuses to accept that the water is real, various average normals of differing physiques, and a big strong Indian sailor who, however, thinks it’s a better idea to row as fast as possible towards land. The ideal solution is *not* to get everyone baling at the same rate. Rather, you’d want to get the best bailers bailing to the best of their ability. Even if it’s not fair that the fat guy takes up so much of the boat’s buoyancy, it’s not useful either – throwing him overboard would use up far too much energy and risk capsizing the craft. Yeah, bailing at the same speed would be fair, but it wouldn’t maximise the rate at which water left the boat. You cannot eat fairness.

Now, the upshot of this is that the sources of emissions growth are highly important. It’s easiest to change things where the change is happening. Rather than moralising about how China’s economic development is all because of terrible consumers, it’s dramatically more useful to think about how factories there might benefit from some of Lovins’ design work, aimed at reducing their energy use by a factor of 10, or how best to reward countries like Brazil for not clearing forests. C&C just offers one group (the developed world) blood, sweat, toil, and tears, and another group (the developing world) rather less money. Offering them not-very-much development and the same technology as before is not an attractive proposition.

Neither is trying to persuade the public not to buy their stuff. C&C fans tend to pull into extremely tight defensive circles at this point. Well, y’know, the gains were only achieved by offshoring industry to China. Buying stuff with fewer miles will, ah, bring industry back, and we know that less CO2 is emitted per dollar of GDP here. But the gains only came from offshoring! (Not true, anyway. Germany’s emissions fell, and it’s a bigger exporter than anyone else, even China.)

Further, the operational suggestions tend to be awful. C&C is based on the idea of an individual CO2 ration, which unavoidably leads to the notion of an individual CO2 ration card, which is essentially a national ID card and tracking system in earth tones. In fact, it might have to be a global system. One of the reasons why I like universal tax and benefit proposals, by the way, is that they minimise the opportunities for mass surveillance.

Carbon tax and redistribute. It’s the only way.

Update: have a read of “Elizabeth Economy”‘s piece in the Nation.

This DeLong vs Krugman post, and the comment from James Galbraith, raise an interesting issue regarding redistribution of income, free trade, and globalisation. Namely, as trade creates both winners and losers, but with a positive sum, it is both just and politically necessary that the winners compensate the losers. You could consider it a side-payment for the gains, or a necessary social duty. The cynic in me suggests you could consider it either, so long as it happens.

Economists Peter Timin and Frank Hailey at Voxeu.org – a site well worth reading, I suspect – argue that rather than changes in technology, or globalisation, rising inequality in the US since the 1960s is due to changes in institutions. That is to say, US society made a political choice to reduce minimum wages and union power, and cut taxes on the rich. Women with degrees were the only large group whose earnings kept pace with productivity growth, presumably reflecting the simultaneous rise of middle-class feminism and decline of working-class unionism.

As James Galbraith points out, Chinese labour relations is an issue that we have little power to influence, but the minimum wage is entirely ours to control. This raises my point.

Milton Friedman argued in favour of floating exchange rates on the grounds that it was better for one price, the exchange rate, to adjust in order to respond to variations in the relative price levels of economies (and in the animal spirits of speculators) than all the prices except that of foreign currency doing so. In the strong form of a fixed exchange rate, the gold standard, the adjustment process involves changing prices and wages in the entire economy including the nontradable sector.

Similarly, if you try to reduce inequality by protectionism, that involves altering thousands and thousands of investment and management decisions in favour of domestic production generally. And it’s pretty obvious that the more decisions you fiddle with, the more you are going to bugger up. The upshot, naturally, is that you should prefer solutions that minimise the number of decision points for any one institution. That implies the best solution is just to, well, tax the rich and redistribute as directly as possible.

What does this say about my views on CO2 emissions control? Well, administrative controls or rationing are clearly right out. Cap-and-trade is a poor second best, especially given all the possibilities for pathology in there – imagine that there are two glassworks, one of which fuels with coal and one which drives an electric arc furnace with hydro power. Glass from A will have a really bad carbon rating, and vice versa. There will be a strong incentive for buyers of Glass A to misrepresent themselves as buying B. If the CO2 charge falls on the end user, rather than Glassworks A, A doesn’t have much of an incentive to change rather than cheat.

The best solution? Tax carbon-rich fuels at the point of sale, and redistribute some of the revenue to the poor. There’s an existing and highly effective administration to collect such a tax, too. Set a broad goal – perhaps in the form of an average over several years, to keep the dog from chasing its tail – and link it to the tax calculation so an overshoot has automatic consequences and an undershoot has rewards. (See also this post at Kleiman’s.)

After this post, my quest to grasp heterodox economics moved on to this Crooked Timber thread, in which Dsquared argues that the biggest problem with orthodox economics is that it doesn’t really account for profits. And profits are a pretty big thing to miss, especially as the entire notion of economics relies on the idea that firms maximise their profits. (Consider competition – how would you know if you were competing successfully if you didn’t make or lose money?)

However, standard assumptions include the idea that no-one makes more than the amount of profit they need to keep them from going and doing something else, so-called normal profits. (If they made more profit, more competitors would pile in until the rate was reduced.) As the general alternative to production is to keep your money in the bank, it’s argued that therefore normal profits equal the cost of capital, i.e. the rate of interest.

But, as Dsquared points out, nobody thinks that a company that only covers its cost of capital is doing well.

The upshot is complicated, but it raises all kinds of curious issues. For a start, if there are no profits in a capitalist system, how do we account for economic growth? In a sense, once you decompose growth by factor and strip out one-time factors (population change, digging up more stuff), what you’re left with is the economy’s aggregate productivity gain plus the product of the net change in capital stock (which is after all the share of past income that went into investment).

More importantly, how do we account for change over time? Schumpeter argued that supernormal profits existed in the short and medium term as a result of asymmetric technological progress – they were the return to innovation, which created a temporary monopoly rent before further technological change destroyed it. This explanation – the principle of creative destruction – is intuitively sensible, logically coherent, explains the presence of profits and long-run growth. It also justifies the existence of profits and quasi-monopolies, which is handy.

What if there were no profits in reality? It’s hard to answer this without tripping on definitions. Assume a company in which the management aims to break even, and any surplus is paid out in wages. There is no official profit here, but it’s clear that the company will still try to maximise its surplus. In fact, it may well try harder – everybody’s interests are aligned, no? It will also try to compete with other firms, to take a hard line with its bankers and its suppliers, and try to keep its margin up on sales. It is likely to rent-seek with regard to everyone else but its own employees. The story is not that much different if the surplus is to sink into its trading partners, so long as they have means to hold it accountable.

Oddly, getting rid of profit doesn’t change the picture very much. That’s because we haven’t – we’ve just shifted it from the capital share of GDP to the labour share. One thing that has changed is economic rent – changing the factor that benefits changes who the firm can gull. Clearly, the difference between profits that arise from economic rent and from value-adding is going to be important. But that’s even harder to define – in Schumpeter’s terms, of course, having a new productive technology before anyone else allows you to collect a monopolist’s economic rent, even though you’re adding value by deploying it.

Around this point a lot of people in the past have tried to draw a value judgement, a distinction between the return to “healthy”, “good” improvements in productivity, and “bad”, “exploitative” rents. Unfortunately, this is one of the points at which people start to go crazy; the distinction between raffendes and schaffendes Kapital (“robbing” and “creative” capital) was a favourite of German proto-fascist and indeed fascist economists, who tended to associate the first category with Jews, Freemasons, international bankers etc, and the second with their favourite armaments industry tycoon.