Economies of Deceit

Social organizations grow ever larger, and resist disintegration, due to economies of scale. There are disproportionate benefits to being large, sufficient to over-compensate for the associated disadvantages, to support expansion, and to fund the suppression of fission. Like every trend reinforced by positive nonlinearities, large-scale social formations accentuate the gradient of time, realizing a ratchet mechanism, through ‘network effects’. In this way, they contribute not only to the content of history, but also to its shape.

When the fundamental deformation of history was evidently attributable to scale economies, it was only natural to speak primarily of Leviathan — the seizure of historical time by the gigantic. It might therefore be considered a significant symptom — of something — that a substitute term now seems more persuasively applicable. Leviathan remains vast, and growing, but it is more exactly specified as the Cathedral, because its principal ratchet mechanism owes less to sheer magnitude than to a mastery of deceit.

Deceit is nothing new, in matters of power, or any other, but it is open to innovation. A state religion that pretends to be the negation of religion is something new, as is propaganda in its strict sense. There is no precedent for an intolerant, precisely coded system of belief, trending to a totalitarian form, whilst presenting itself as inevitable progress towards general disillusionment.

Economies of deceit, like those of scale, draw historical momentum from the fact that they are profoundly automatized. No one decided that large-scale social organizations should be advantaged. Similarly, the revolutionary efficiency of deceit was never a point of deliberation. Deceit works, due to contingencies of deep evolution. More specifically, it works because propaganda machinery was never a factor in the archaic human environment, so that stimulus sensitivity was never provided with the opportunity to adapt defensively in respect to it.

The total power of deceit can be understood most clearly when examined backwards, from its final destination, which is shared with the entire utilitarian sphere. At the end there is the wire-head, the social and technological destination of direct neurological rewards, where the message “I have received what I want” has been divorced from all real acquisition or accomplishment. Do you want this thing? Or do you want the feeling that you have this thing? The latter can be strengthened, sharpened, and in every way subjectively perfected. It is also, given suitable historical conditions, vastly cheaper to deliver. Hence, the economy of deceit.

For those paying attention, the entire structure of economic thought and policy switched onto this track roughly a century ago. The demetalization of money is the most obvious indicator, trending towards a pure signal of wealth, entirely disconnected from the extravagance of physical reality. Keynesianism, in its essence, is wire-head economics, focusing on the policy question: how do we best deliver the stim? The idea that growth of the real economy might be the best route to this goal marks its proponent out as a hopeless crank, entirely out of touch with the recent development of the discipline. What matters is the wealth effect, delivered in carefully calibrated jolts, down the wire. (I’ve tried to thrash this out before.)

Gradually, but inexorably, propaganda swallow everything. All macroeconomic aggregates — GDP, inflation, capital stock … —  tend to senseless garbage, because their only robust anchor point is Cathedral-political: what can we make you feel? The latest evidence is telling. It is time, apparently, to definitively break with archaic questions of economic production, and instead to work solely with the macroeconomic garbage data, in order for it to tell us that we’re richer than we think we are.

You can’t make this s%&t up. Yes we can!

July 28, 2013admin 15 Comments »
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15 Responses to this entry

  • Handle Says:

    This is clearly a problem I need to address. I commented over at Kling’s place about one particular aspect of the problem of using CPI, but it’s a large question that needs a thorough, indeed, scholarly treatment.

    It may, indeed, be the question of the age – connected to all the others. How accessible is the old vision of the good life? And how adequate as replacement are these celebrated substitutes?

    I’ll get to work.


    admin Reply:

    Libertarians and conservatives get themselves tangled up on this topic. On the one hand, those with any technical competence understand that macroeconomic aggregates are just made up (and that there are not real things corresponding to ‘total social capital stock’ or ‘aggregate demand’), but on the other they want to counter Leftist whining by emphasizing the living-standard advances made even under the sad remnant of capitalism remaining to us, and thus side with conjuring tricks like ‘hedonic’ revisions of the CPI. They know — if they know anything at all — that since real economic values are only disclosed through transactions (as revealed preferences), and transactions require goods or services to be simultaneously available on the market, all attempts to construct a scientific CPI time-series comparing non-exchangeable goods is completely bogus. The trend to make monetary value a matter of political expediency rather than market order removes the last possible reference point with intrinsic credibility. Propaganda captures the entire framework, and even ‘right-wing’ economists think they have no alternative but to climb into the arena and wage the contest of lies.


    Handle Reply:

    So, this is definitely not a criticism of admit, but just something that’s been on my mind. I’d like to hear more middle-ground sounds between the hard insistence for Lèse-majesté worshipful levels of respect for notions like GDP and the Price Level and the disdain and pure dismissal of these and related notions as ‘meaningless’ and phony that I read around these parts.

    It’s not like these notions and the metrics and indices we used to estimate them haven’t been criticized and argued over for a century. People have made careers out of proposing refinements and alternatives (e.g. Barnett’s Divisia measure of the effective Money Supply), or even more valuably, spelling out the caveats and the limits of pragmatic usefulness.

    But, for all their artificiality and fudges and kludges, it turns out that out clunky efforts seem to correlate well with things that are measurable in straightforward, accurate, and non-controversial ways. Indeed, it is the fact that a lot of real-world economic variable tend to correlate well with each other that explains the usefulness of the metrics.

    If you are trying to measure ‘production’ and ‘consumption and it turns out that this phoney-baloney GDP combined with the concocted fabrication of Inflation tends to move in sync with an accurate count of widgets and the price they are going for on the market, well, you might just conclude that for all their faults these numbers, if imperfect, are nevertheless good enough for certain kinds of analysis if not abused.

    Personally, I prefer approaches that are more modest, specific, and constrained in their presentation. For instance, holding a ‘standard of living’ consumption-basket fixed instead of allowing for substitutions helps provide more direct comparisons, but this is exactly what ‘shadow-stats’ does and the formula is visibly something close to “CPI plus 3 percent” with identical derivatives. Not bad for bogus.

    But all this leads to what I’ve been suggesting for several years now – the people should be proposing alternatives. Don’t like Fiat money? Come up with a proposal for a business plan to produce an instrument that does better. Don’t like ‘inflation’ or ‘gdp’ – propose a different metric so we can discuss changes in the economy without being paralyzed. It’s a moderate and creative approach that’s better than intellectual nullification.


    admin Reply:

    This is all very reasonable — and even a little too reasonable. Whilst absolutely agreeing that this moderate approach needs to be patiently engaged, it’s also important to be cautious about the hidden assumptions that can be smuggled in unreflectively. The most important of these, I think, is the ‘we’ that sounds as if it designates a neutral and dispassionate intellectual community, but which for all practical purposes really designates the organs of macroeconomic policy-making (which economic ‘science’ now slavishly serves). Do we in fact want to preserve this perspective, improved perhaps by minor rectifications, when its very existence presupposes the right of economic planning from on high? Wouldn’t it be better to plunge ‘academic’ economics into terminal data night, if that was the only way to impose practical modesty upon the dominant agencies of socio-economic control?

    It’s important that distributed economic agents have the tools they need to facilitate rational decision making in the market place. First among these, of course, is a durable, market-tested, spontaneously appreciated, medium of exchange, immune against political manipulation. Is it of comparable importance that ‘economic oversight’ — even of a disinterested, purely academic kind — is facilitated by reliable metrics? If it is, the case at least needs to be made.

    Alrenous Reply:

    As I repeated for Moldbug’s comment section some years ago, economic growth drops by 1% when state debt rises above 90% of GDP, it can’t be completely arbitrary.

    Of course, adding in Moldbug’s recent explicit comments at Sailer’s, what I’d like to see isn’t ‘American’ GDP per capita but hipster GDP and IWSB GDP and Mexican-underclass-immigrant GDP. Oh, and HNWI (high net wealth investor) GDP. Those would be fascinating. (HNWI population has been going up since the end of 2011.)

    The median wage has been falling in real terms…whose median wage? ‘American’s?’

    Handle Reply:


    Perhaps it’s a question of competing suspicions. I can justifiably look with jaundiced eyes at government-published numbers (squinting at them at different degrees depending on their dubiousness). At least there’s a good ‘literature’ on the caveats of these government numbers.

    If Tanner Scheppers “didn’t file a formal report because Cleveland police told him that it was unlikely the attackers would be apprehended. “It happens a lot, actually,” they told him.” then we have some reason to suspect the accuracy of evaluating one’s risk of being the victim in Cleveland of being a victim of a ‘random’ black-on-white racial-hate-crime street-assault.

    But on the other hand I’ll be even more doubtful of claims about our world that aren’t backed by presentations of quantitative data – where even more mischief can be played with words. It just so happens that we lack an infrastructure of ‘alternative statistics’ philanthropy. We do have alternative statistics markets – but they keep their numbers under tight controls for the sake of profit and confidentiality. We also deal with a world in which professors at public universities working with tax-funded grants, in public-subsidized journals keep their data (occasionally at odds with official-dome) and methodology close to their vests. We also now lack (some) public prediction markets to supply information about the market’s degree of confidence in certain kinds of data. But markets can screw-up too.

    What’s a poor, free-time-starved, internet-crank like me to do? So government numbers are what we’ve got. And some of them – like quantities and prices of particular commodities – are perfectly fine and provide me a way to explain certain phenomena about our world:

    For example – consider “real personal income less transfers per capita, deflated to nominal, inflated by oil price”:

    The private income of the US can buy the average person how many barrels of oil? What periods are loose or tight, more like subsidies to the overall-economy or more like drains? Does this match our subjective experience (yes, in my case). Does it help us understand a certain aspect of the struggles to preserve ‘living standards’ and ‘quality of life’ and ‘middle class welfare’ – as the generation of whites who fled to the safety of the suburbs and exurbs, and the generationally-unchangeable housing stock built on certain assumptions, and the long-commutes needed to support it all – suddenly become increasingly unsupportable.

    Well, anyway, it’s numbers for me. Lemons, perhaps, but I’ll make lemonade. I’ll the best with what I’ve got.

    Posted on July 28th, 2013 at 8:05 pm Reply | Quote
  • James Says:

    A more sinister effect is that in addition to deceit, by destroying good institutions over time Western elites have made it difficult for there to be principled opposition to their entire form of politics and Weltanschauung.

    Consider immigration. The best answer to the problem is that no-one’s arbitrary whim should decide who migrates where: not voters, economists, politicians or bureaucrats. Ideally, there would be a plethora of good institutions that shape this type of legal outcome on every scale, including private property, contracts and restrictive covenants, local jurisdictions in a federal polity, jurisdiction as property and city-based visas.

    Since such diverse institutions have been diminished or abolished by the steady tide of progress, the difference in the quality of currently feasible “policies” is less stark, so only a modest amount of deception or intimidation is necessary for the elite to persuade a typical person.


    Posted on July 28th, 2013 at 8:39 pm Reply | Quote
  • Discipline Says:

    On a scale that you can warp at will, progress is inevitable, its definition elastic, only understood fully by an esoteric priesthood of number magicians. Material production is best understood through state-published production aggregates. Examining actual conditions? The real world? The economists know of a higher reality, more important than the mere atoms you focus on.


    Posted on July 28th, 2013 at 8:43 pm Reply | Quote
  • Alrenous Says:

    More evidence for my sophistry narrative.

    An economy of deceit has an astoundingly destructive effect on the human soul. Science has confirmed the Epicurean recipe for eudaimonia, but what of the relationship when lies are high fashion? They’re impossible.

    Of necessity, one’s facade is shallow and simple compared to an honest personality, but today to glimpse behind the mask is only to see another mask. I often wonder if many have forgotten who they really are under all those masks.


    James Reply:

    It is said that communism permanently damaged the Russian psyche, due to the cruel adaptations that were necessary to survive under such a regime.

    Our integrity has been damaged by progressivism, and I wonder what else.


    admin Reply:

    “communism permanently damaged the Russian psyche” — cause and effect isn’t easy to disentangle in this case. The Russian psyche had to be seriously damaged for there ever to have been communism (on a continental scale).


    Alrenous Reply:

    I won’t comment about how Russians were under communism, but they weren’t very nice people to begin with, and many of them have become a lot wiser as a result.

    “Despite the futility of the questions, they asked themselves over and over: How could we have put up with this degradation? How could we have allowed this to happen? How could we have accepted such inhumanity for so long?”

    The next step being, ‘I guess we shouldn’t allow it again.’

    “During the time I was in Czechoslovakia, the vilest epithet one Czech could hurl at another was jsi stára struktura: “you are old structure”. It meant: you sold out to socialism, you were an active part of the collectivist power structure, you abetted the destruction of our lives and our country. It was reserved for the most diehard communists, and in all my time in Czechoslovakia I never heard it addressed directly at any person (except in jest between good friends), as it was too horrible a thing to accuse of someone face-to-face.”

    They now recognize evil for what it is. Can you say the same of any western country?

    “You know, each one of us has a little bit of the stára struktura deep in his heart, and it will remain there for the rest of our lives.”

    They recognize evil even in themselves.

    Perhaps this is my optimism talking, but you can probably make a Czech politician unelectable with a single reasonable insult of stara struktura. (Or perhaps they say that all the time to each other anyway, so it’s meaningless to a pol.)

    We left Russia in April. One week later, on May 1st, we saw a small Communist demonstration in the streets of Vienna. The realization that those people were there entirely voluntarily, without anyone threatening them or offering them toilet paper or an extra day off work was stunning. “They are insane,” offered an older neighbor for an explanation. I was a innocent young girl then, at least in some ways, and wondered why they don’t move to Russia. “Not that insane,” suggested the neighbor.

    Russians recognize insanity when they see it, and know better than to think keeping quiet about it is polite.

    Then there’s this humbling and delightful exchange. Emphasis mine.

    Wherever I go, whether my audience consists of local students, congressional staffers, or post-Soviet professors, when I present the Trolley case and ask them whether they would switch tracks, about ninety percent will say, “there has to be another way!”

    A philosophy professor’s first reaction is to say, “Please, stay on topic. I’m trying to illustrate a point here! To see the point, you need to decide what to do when there is no other way.”

    When I said this to my class of post-Soviet professors, though, they spoke briefly among themselves in Russian, then two of them quietly said (as others nodded, every one of them looking me straight in the eye), “Yes, we understand. We have heard this before. All our lives we were told the few must be sacrificed for the sake of many. We were told there is no other way. What we were told was a lie. There was always another way.

    The unfortunate implication is that it takes communism to teach the average voter what evil is.

    Posted on July 29th, 2013 at 1:41 am Reply | Quote
  • Handle Says:


    I don’t know why the “img src” didn’t post for that chart (blocked by your site?): Try this link instead.


    admin Reply:

    Your usage of economic numbers is exemplary — employing a fungible commodity price as a standard, and thus eliminating both inflationary distortions and arbitrary (‘hedonic’) estimations of value. I don’t have any problems with it at all. The difficulties begin with the application of this method to significant macroeconomic aggregates, which are intrinsically mystified to a far higher degree. For instance, so long as government spending is assumed to be a contribution to GDP, the concept strikes me as hopelessly broken from the start. In the case of public expenditure no revealed preferences are available to measure real value. A Keynesian fundamentalist government really could introduce a project burying coins in mine-shafts for private sector re-excavation, entirely confident that this would be ‘properly’ reflected as economic production in professional statistics. My sense is that this only mildly exaggerates much actual government activity, and perhaps even understates its uselessness (or destructiveness) in many cases.


    Posted on July 30th, 2013 at 11:21 am Reply | Quote
  • Outside in - Involvements with reality » Blog Archive » Quote notes (#73) Says:

    […] blog has already dismissed macroeconomic aggregates as politicized ‘garbage‘ — so I […]

    Posted on April 18th, 2014 at 8:33 am Reply | Quote

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