Game theory and the shaping of neoliberal capitalism
21 Sep, 2017 at 17:00 | Posted in Economics | 9 CommentsNeoliberal subjectivity arises from the intricate pedagogy of game theory that comes to the fore in the Prisoner’s Dilemma game and is interchangeable with contemporary paradigmatic instrumental rationality. Rational choice is promoted as an exhaustive science of decision making, but only by smuggling in a characteristic confusion suggesting that everything of value to agents can be reflected in their appraisal of existential worth even though this is patently not the case in life viewed as a ‘fixed game.’ Without a critical and scrupulous pedagogy that carefully identifies as optional the assumptions necessary to operationalize strategic rationality, a new neoliberal understanding of capitalism will dominate the worldview of the student of game theory and inhabitant of neoliberal institutions.
When criticising game theory you often get the rather uninformative and vacuous answer that we all have to remember that game theory — as is mainstream neoclassical theory at large — is nothing but ‘as-if-theory’ built on ‘as-if-rationality.’ As Ariel Rubinstein has it, however, this only shows that “the phrase ‘as if’ is a way to avoid taking responsibility for the strong assumptions upon which economic models are founded” …
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“Without a critical and scrupulous pedagogy that carefully identifies as optional the assumptions necessary to OPERATIONALIZE strategic rationality, a new neoliberal understanding of capitalism will dominate the worldview of the student of game theory and inhabitant of neoliberal institutions.”
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Again, I return to the distinction between geometry and metrology (aka measurement). Game theory, as typically expounded in economics, has the epistemic status of a geometry. The ancient Greeks were scrupulous about doing geometry with compass and straightedge only — no measurements were allowed in working out the logical relationships. But, no amount of geometry ever makes a map of the world as it is.
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Many economic theorists are aware of this limitation and will retreat to ‘as if’ and ceteris paribus when it suits them, but that does not stop them from pontificating from the position of total ignorance their reliance on theory without practice places them. And, to a large extent the systematically flawed “worldview” behind the neoliberal consensus is founded on exactly this studied ignorance of the world and reliance on an analytic theory ‘as if’ it were presenting models of actual institutions, when nothing could be more epistemologically wrong-headed.
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Actual institutions — the complex social mechanisms of human cooperation cum competition — do, in fact, operate by creating a kind of virtual reality in which games are played according to rules. This is the nature of institutions. Game theory is as necessary for developing an understanding of actual institutions as geometry is necessary to the cartographer or geodesist. But, it is wholly insufficient to have theoretical “insight” alone — we might as well presume that the analytic concept of a geometric plane dictates a flat-earth, with a far edge and beyond that, dragons.
Comment by Bruce Wilder— 22 Sep, 2017 #
Many words with no point, in a short space. Please elaborate.
Comment by Jan Milch— 22 Sep, 2017 #
“Actual institutions — the complex social mechanisms of human cooperation cum competition — do, in fact, operate by creating a kind of virtual reality in which games are played according to rules.”
Yeah. The promise of technology is that we can make the realities more virtual and more protected from each other, and let neoliberals live in a world where their models are predictive and everyone acts rationally self-interested because anyone who chooses to act differently is free to live in their own VR. It’s like operating system virtualization, ramped up to holodecks …
Comment by Robert Mitchell— 23 Sep, 2017 #
I agree fully.Thanks. Be well!
Comment by Jan Milch— 23 Sep, 2017 #
“Without a critical and scrupulous pedagogy that carefully identifies as optional the assumptions necessary to operationalize strategic rationality, a new neoliberal understanding of capitalism will dominate […]”
The problem, for me, is that neoliberalism dominates public policy. If we identify the assumption of rational self-interest as optional, we should also support the choice not to pursue profit, and to find value in things without doing any exchange, with public policy such as a basic income.
Comment by Robert Mitchell— 22 Sep, 2017 #
Well ,no more have to be said about this type of mindacrobats,than say good luck and have mercy on them !! May Joe Zawinul and Cannonball could save their souls?? https://www.youtube.com/watch?v=s4rXEKtC8iY
Comment by Jan Milch— 21 Sep, 2017 #
🙂
Comment by Lars Syll— 21 Sep, 2017 #
Ha en go helg. på Fabians ö. bäste Lars! Jan i Götet
Comment by Jan Milch— 22 Sep, 2017 #
The second half not bad; Howe it is not an easy read
Comment by Dwayne Woods— 21 Sep, 2017 #