Entropy Economics and Trump's Vision of Oblivion

Entropy Economics and Trump’s Vision of Oblivion 

                                                                      

                                     

                                                                                                                                        

By Don Curren

Entropy Economics: The Living Basis of Value and Production is a small book – it's 200 pages long – with a big ambition: it seeks to provide an entirely new foundation for economics.

Written by the academic economists James K. Galbraith and Jing Chen, Entropy Economics argues against the emphasis on balance and equilibrium in mainstream economics.

“The basic terms of reference (in mainstream economics) are the concepts of supply and demand, which interact in a market and come to rest at certain prices and quantities,” they write.

“(At) the heart of the matter lie the concepts of balance and equilibrium – the immanent order toward which a market system is supposed to tend,” write Galbraith, the son of the great Canadian/American economist John Kenneth Galbraith and a professor of economics at the University of Texas, and Chen, an assistant professor of economics at the University of Northern British Columbia.

They believe the version of economics based on equilibrium is fundamentally wrong and should be replaced with one centred on entropy.

“(While) entropy is a universal law of nature, equilibrium is nothing more than a figment of economic models and the imagination of their creators,” they write.

“Economic activities are like biological and mechanical activities in two critical respects,” Galbraith and Chen write. “First …. (they) are necessarily non-equilibrium processes, prone to instability and breakdown as they become larger and more powerful.”

“Second, they require regulation, and therefore government, to exist in the first place and function after they are created,” they add.

I’m not going to attempt a review of Entropy Economics in this piece. 

While the basic argument seems compelling, there are sections heavily reliant on mathematics that are beyond me.

And the book seems a little peculiar, structurally.

It reads more like a grab bag of interesting observations around its central theme rather than a systematic exposition of entropy economics.

Some of it seems crystal clear, other sections dense and recondite, sometimes to the point of frustration.

Much of that may be down to me rather than any fault of the authors.

The book has been praised by renegade economist Steve Keen, who said on his Substack that it “is a work that develops at least part of the new paradigm that economics so desperately needs.”

What I want to focus on here are remarks Chen and Galbraith make on inequality that are relevant to the current situation in the US. 

They remark upon the fact that when the dominant parties in a system expect it to end soon, “the inequality of the social system seems to increase so that the dominant parties can extract more profits while the system lasts.”

One instance of this is the tendency for the tolerance of inequality to increase when the time horizons of those in charge shorten. 

One way those timelines can shorten is through age; those who don’t expect to live that long have less interest in ensuring the current system remains sustainable.

Although they seem to be asserting this as a general principle, Chen and Galbraith illustrate it with examples drawn from the history of the US.

“It may be that when a society is governed largely by older people, the tolerance for inequality goes up as time horizons shorten,” they write. 

“When Ronald Reagan became the president of the United States in 1981, he was both the most inegalitarian modern president and the oldest president in the United States to that date,” Galbraith and Chen write.

“There have been other elderly presidents since,” they add wryly.

They don’t explicitly mention the current occupant of the White House, but the argument obviously applies to him.

The signature legislative “accomplishment” of Trump’s first term were his tax cuts, which inordinately benefited the rich and contributed mightily to inequality.

But to truly understand Trump’s impact on inequality, I believe one has to augment Chen and Galbraith’s observation about inequality and contracting time horizons.

They might be trying to supplant mainstream economics, but  they share some of its assumptions when they attribute the tilt toward inequality to a rational response to shrinking time horizons.

Trying to account for the behaviour of Trump and his minions with a framework that assumes all humans are rational optimizers is ultimately bound to fail. 

It’s become clear the forces at play in the advent of Trumpism are too irrational for that.

The second term has revealed the full extent of that irrationality.

In the first term, I believed Trump and his supporters represented a kind of vicious rearguard action by a societal group – essentially privileged white males – who sensed their time in the driver’s seat was rapidly coming to a close.

It was an elite that understood instinctively that the socio-economic world it exploited and its dominance within that world were ending.

The election of a black president, the increasing ethnic diversity of the US, the erosion of patriarchal values that underpinned their power and the massive tide of social change unleashed in the previous decades signalled to them their days at the top of the social pyramid were rapidly ending.

So, they found a supposed avatar of “old-fashioned American values” they could rally around and contrived to put him in the White House.

Once installed, he did everything he could to tilt the balance in favour of himself and those aligned with him.

But on the whole, he tended to play by the established rules. 

He didn’t attack the institutions that underpinned the relative success of the United States.

He didn’t seem intent on destroying the foundations of American prosperity. 

At least not until January 6, 2021, when he tried mightily – but failed – to overturn the results of the 2020 election. 

The second term has been different.

The motive no longer appears to be simply making hay when the sun shines.

In fact, by attacking the foundations of the US economy and of the safety and security of US citizens, Trump seems intent on destroying that future, on depriving anyone who comes after him and his minions of the advantages the American system delivered.

There’s a wanton destructiveness, a nihilism behind so many of this Administration’s decisions that extends beyond merely wanting to exploit the system as much as possible before they die.

They want to do that - and then blow the system to smithereens so that no one else can ever benefit from it again.

It’s a destructive impulse that defies the explanatory power of mainstream economics, and of entropy economics, at least insofar as it’s articulated in Chen and Galbraith’s book. 

That’s because Trump’s destructiveness is rooted in his malignant narcissism, not in the attitude of rational self-interest that most of economics is predicated on. 

When Trump looks into the future – if he ever does - he doesn’t see the countless generations of future Americans who will be seriously harmed by his actions. 

He sees a black void. 

Black because it isn’t illuminated by any interest in or concern for anyone else. Black because if he won’t be there, for him it doesn’t exist.

The same applies to his perception of the present. Unless the people around him can be manipulated, humiliated, diminished or destroyed to achieve some end of his own, they don’t exist.

A phenomenon like Trump can’t be explained or understood solely through economics, which tends to want to explain things through the interaction of rational, optimizing agents.

He’s perhaps better understood through disciplines and thinkers who draw from psychology, sociology, philosophy and other fields: thinkers such as Hannah Arendt and Theodor Adorno and his colleagues in the Frankfurt School.

But the authors of Entropy Economics do provide a useful point of departure in their idea of shorter timelines driving an increase in inequality.

And entropy itself, in the broader metaphorical sense that many people use it, is certainly relevant to Trump, a world-class destroyer of order and meaning in the world, and top-notch agent of chaos, disequilibrium and oblivion.