October 31, 1991
Jackson Pemberton
One of the enigmas of our modern world is the phenomenal growth of knowledge about our physical world concurrent with a noticeably slower social and political progress. We can orbit the earth with seeming ease, but many of our orbiters are used to spy on one another. The breech is symbolized frequently by the infamous mushroom cloud. Much has been written about the disparity, and there seems to be agreement that is has been caused by various factors. Things physical, for example, are objective, easily described, measured, and documented. Social excellence, on the other hand, is profoundly subjective; the result of thousands of personal experiences, not one of which can be described by symbols as can a house, or a patent. Whatever proficiency one may attain in understanding social issues is largely lost in death, and must be relearned by each generation. Yet the physical realities on the one hand and the social on the other constitute the two vital realms of our existence.
Economics is the link between them.
It is the moral and social values which cause people to work, save, buy and sell the physical, and it is the ethical and emotional values which ultimately give monetary values to goods and services. Economics is therefore the mechanism by which we translate our personal values into physical realities.
Some interesting deductions follow from these considerations. First, it is improper to consider social and technical progress as opposing one another, for the latter flows from the former. It is more accurate to observe that we have placed lower priority on the social; or, if not lower priority, then at least insufficient to insure that each generation receives a well balanced mix of social and technical understanding. Second, the crucial role of social, ethical, spiritual, (call it what you may) training of the rising generation is evident. If there is confusion or a discontinuity in this area of our existence, it will give rise to similar phenomena as in the physical sector. Finally, the important role of economics is pointed up by the fact that it is the interface between the two major realities of our existence. In other words; economics is the operator by which goals and dreams become physical realities. Thus it is of decisive import that this vital operator be efficient, accurate, and dependable. It is to this aspect of economics I would hope to add some helpful thoughts.
While searching through a thermometry instrumentation catalogue recently, I came across a section on standards, units, calibration, and tractability to the National Bureau of Standards. The previous evening I had read a piece on monetary policy and monetary standards. The similarities of the issues discussed in the two articles was intriguing, especially in light of our tendency to rate ourselves as under-achievers in social matters and over-achievers in technology.
One of the reasons we make such satisfying progress in the scientific area is that we have found a value system which allows us to quantify observed phenomena. In engineering, we repeatedly rediscover that we really do not know very well what it is we are trying to do until we can begin to use specific numbers in the description of the attempted operations. While it is true that we often use numbers in describing aggregate social events, we have not yet discovered a numerical value system by which we can measure and thus accurately describe those moral actions which comprise the aggregate. In chemistry, the Bohr model of the atom unlocked the door to rapid progress, first in chemical activity and then in atomic physics. It seems likely that we will discover some set of agreeable definitions by which we may quantify the fundamental particles of social behavior (patience, love, forgiveness, etc.) before we move rapidly ahead in our moral sphere. But perhaps we have already come farther than we suppose.
As a society moves from a barter system to a monetary one, it also adopts a numeric value system intrinsic in the money. In our society, although we typically deny it, we frequently place monetary values on aesthetic and social items. A "priceless" painting will change hands at an exact number of pennies. A wage-earner decides exactly how much he will spend to protect his ability to work and purchases disability insurance. A woman decides, after examining several rings, that it is not worth the time and expense to return to a previously visited store to save $5.47. A worker determines that the vision of his left eye was worth $67,000 in a voluntary, out-of-court settlement. Perhaps our economic activities can eventually assist us in comprehending our social operations. Again, the need for a stable, simple, monetary system appears.
Anyone who has had the experience of using a new currency (such as a foreign traveler) has learned the benefits of a stable, simple monetary system. Although the exchange rate may be known precisely, even a simple economic operation like buying a shirt becomes awkward at best. The lack of experience robs the buyer of the "feel" he would like to have as he compares his alternatives. Inflating or deflating money gives rise to the same difficulty: the "feel" is lost. In an environment of stable money, real estate professionals can acquire a feel for value with sufficient accuracy to independently assign property values which fall within 0.5% of perfect agreement. (This happens to be a level of accuracy which is typical of most engineering in this century.)
In the sciences, both the need for and the ability to provide increasingly precise standards have occurred in parallel. A very interesting discussion may be held on the issue as to whether the more precise standards gave rise to progress, or progress enabled greater precision. Although that question may go unsettled, there is prompt agreement that both occur together, and that neither may advance very far without the other. Be that as it may, it is noteworthy that increased precision gives the scientist a more accurate understanding or what amounts to a better feel for what he is doing, and thus his decisions become more precise and his actions more effective. There is an increased perception of truth which gives rise to more perfectly conceptualized operations which in turn enable more profound technological activities.
There certainly is no change in the universe with which he works. So far as he is able to discern, at least, he works with the same elements, forces, and relationships as did the earliest investigators. What has changed is perception, concepts, and instrumentation (tools).
Increased precision may be the key. It is by this means that the scientist has been able to discover unknown phenomena. Typically, increased precision (better tools) improves his measurement or perception until he finds that his current theory (concept) is inadequate and he continues his search for a better, shall we say, more precise conceptualization of truth. Then he invents better tooling so he can test his latest understanding; and so the cycle revolves.
It seems possible that increased precision in economics, our link between the physical and social worlds, could lead us to a more accurate and hence more effective comprehension of social mechanics and ultimately to a happier ethical behavior. If the launching and deployment of a satellite in a precision orbit is taken as the result of the harmonious orchestration of physical activities based on an ever improving accuracy of physical measurement; then what might be gained by an improving economic accuracy?
To be more specific, the scientific cycle is typically described as theory, experimentation, revised theory, etc. This ignores the fact that the experimentation required to test the improving theories demands improving accuracy. It may be important to note that both the revision of theory and the improved accuracy are creative human activities. When this expanded cycle is diagrammed, it could look like this:
better theory ------>
experiment
better tooling ----->
To translate this by analogy into the socio-economic
realm:
better social understanding --------->
life
better economic measurements ---->.
I never have figured out where this ought to go next. Maybe in the dust bin.
02/11/99