Radical Redesigns — Are They All About Allocations?

I am inspired by a political movement, going by the name Radical Markets. And yet I have reservations about its vocabulary and framing. I’ll briefly cover why I’m excited and what could be better.

I’ve long believed in the radical redesign of institutions, and it’s exhilarating to see a movement around it! I also love the focus on pluralism — on systems that can accommodate multiple overlapping polities/communities. And I’m deeply impressed with the leadership style exhibited by Glen and others — a heartfelt mix of public intellectuality with inclusiveness.

But let’s talk about the approach to radical redesign. How does this movement frame what’s broken with current institutions? What ideas does it bring for redesigning them?

Glen has a certain toolkit. He uses the language of social choice, allocational efficiency, public goods, and mechanism design. I’ll call this “the social choice frame.” This frame obscures some problems with current institutions, while clarifying others.

The social choice frame works best when it’s clear what should be done and who should do it, but hard to gather the time, attention, or buy-in. In the jargon — when a public good is being underprovisioned. Acting to stop climate change is a great example — our current institutions don’t give it the priority it deserves. Alternate mechanisms for allocation would do better.

Glen seems to think that this might explain other failures of markets to provide what we all need — for instance, failures to provide for community, for art, for love, or for adventure. Are these best thought of as public goods, that we just can’t coordinate the right amount of spending on? Would problems of community (or love) be solved if only we could agree to purchase more of it collectively? Or is there a deeper problem?

I take reports of isolation and loss of community seriously. And I believe radical redesigns are the answer. But the social choice frame is the wrong lens.

Instead of viewing institutions (like voting or markets) as allocation mechanisms, we can view them as information aggregators. On this view, a market for cars adds up information about people’s desires for cars. The market for cars does a pretty good job of this, summarizing demand for hatchbacks and minivans, red cars and blue cars.

Similarly, a voting system might add up information about people’s civic desires. But voting is really lossy. When people vote for Trump or Hillary, information is lost. Some people might have voted for Trump because they want to save small town America, others because they are against corruption, but this information isn’t recorded anywhere. It is all aggregated together in a voting block which just says “Trump”. We might say about an election that “the people got what they wanted”, but without gathering the right data, we are being imprecise. We actually lost track of what the people wanted.

Many markets have the same problems as voting. For example, if people buy a tooth-whitening cream because they are worried about being accepted, this isn’t recorded anywhere. It just looks like they want to own tooth-whitening cream. It’s like a vote for Trump. Or, as another example, Tinder (a sort of market for love) doesn’t gather up which kinds of relationships people really need or want. The grand tally of swipes and matches says nothing about my desire to be deeply seen, nor about the conditions under which this is possible.

So let’s return to this question of community. I’ve spent a lot of time — at CouchSurfing and afterwards — thinking about this problem.¹ Does underprovision capture it? People spend a lot on community! Most drinks at most bars. Many real estate purchases. Hours of scrolling through facebook events and meetups. But somehow we are not served. Perhaps misaggregation is a better lens for seeing why. Somehow the important information is being lost in the aggregation of demand.

The idea of misaggregation is part of an alternative frame for thinking about radical redesigns. I’m not sure what to call it — maybe information sociology, or the human systems approach. One of the giants of social choice theory, Nobel-prize winner Amartya Sen, moved from Glen’s frame over to this one.²

This other frame brings up questions that don’t fit into social choice:

  • What sort of information should we cohere around?
  • Is important information getting lost in current institutions? (e.g., are individual values? individual goals? collective goals?)
  • What information actually justifies or legitimizes a project? (Is it about people’s desires? Their rights? Their values?)
  • Can competing concerns be reconciled or combined?

This last question, especially, departs from social choice. In his classic text, Kenneth Arrow wrote: “We will also assume in the present study that individual values are taken as data and are not capable of being altered by the nature of the decision process itself.” But many real-world institutions have mechanisms for improving goals rather than just ranking them. We should want more of these. It seems high time for institutions which give us space to get wiser.

I also believe that only within this broader frame can we address why modernism and neoliberalism failed us. A great challenge of our time is to balance scale with human meaning. Neoliberalism didn’t manage this. To continue to use the language of allocational efficiency and mechanism just digs us deeper.

To do radical redesigns, we need a way to track the human life of an institution. Redesigners must trace the boundary conditions of meaningful participation. To do this, they need vocabularies that span the human and the logistical.

This likely means speaking of what information gets collected — e.g., speaking of our individual goals, values, feelings, and so on. It may even mean articulating our interests in new ways. And then, of course, we need processes which reconcile and balance our interests with those of others.


Notes

1. I used to believe, as Glen apparently does, that community was a problem of public goods. When I worked at CouchSurfing, we were able to tune the incentive structure of hosting to create a massive surge in hospitality. I saw this as solving the public goods problem with a better mechanism. But I discovered later that coordinating supply didn’t actually fix the problem. In economics-speak, I discovered that search costs were closer to the root issue than incentives. Even with a huge supply of hosting, people still didn’t know how to pursue the community they needed. (Otherwise, a club goods approach would have solved the problem for some people.)

2. Sen has focused more and more on the information requirements for justifying social projects. His suggestions now (the capability approach) begin with more information than the rankings/bids of social choice and markets. I take a similar tack in “Is Anything Worth Maximizing?”. In particular, Sen and I seem to agree that data on human values must be gathered directly rather than through preferences.