Tuesday, July 9, 2013

Transparency in Language: We Forget What We Have Taken for Granted

I studied computer science in my second trip to graduate school (UNC Chapel Hill, 1982-86).  In computer science I noticed the abstractions of language used at various levels.  A programmer writing in a high-level language such as Fortran can refer to a variable by a name such as ‘X’.  In this programmer’s thinking X refers to a value, say 3.14, which the programmer has assigned to X.  But in order for the Fortran program to run, it must be translated into a lower-level language.  In this lower-level language X is probably a pointer, an address of a memory location on the computer.  Go to that address, which might be C49AF016, and in that memory location you will find the 3.14.  Referencing is necessary for the computer to work: X refers to a memory location and that location contains a value. 

But the user of the high-level language does not need to think about the memory location.  The Fortran programmer can think X is simply 3.14.  He does not have to think about C49AF016, and because of this he has more time to think on an abstract level about his job assignment.  We summarize this by saying that memory addressing has become transparent to the Fortran programmer.  Just as I can be completely unaware that a transparent pane of glass separates me from a scene before me, so the Fortran programmer can be completely unaware of memory addressing.

Something similar happens in economics.  We employ a high-level language for much of our economic planning and thinking.  This high-level language embodies assumptions about lower-level economic processes (or institutions) which we take for granted.  Let me highlight just one of these taken-for-granted processes.

Peaceful voluntary trade.  We assume that we can carry some valuable commodity such as cash to a marketplace or trading post, and there meet another person who will give us some valuable good in exchange.  We assume this exchange will go on peacefully and only under terms to which both parties have agreed.
Of course it is reasonable for us to assume the existence of peaceful voluntary trade, because it is almost always available for us.  We do not need to think about it.  Instead, we can apply our mental energy to other problems, problems on which we have a chance of improving the outcome.  Peaceful voluntary trade is so certain that is has become transparent to us.

Nonetheless, to develop this website’s thesis, I hope to develop models which will call our attention back to peaceful voluntary trade and other essential institutions of which we may have lost sight.  If I can discover such models, they will help us to describe limits of higher-level economic models, models which build on assumptions of perfect (transparent) underlying institutions.

Let me conclude with an assertion that peaceful voluntary trade is a BIG DEAL.  Our ancestors in the most primitive circumstances probably did not enjoy peaceful voluntary trade.  If humans find themselves without peaceful voluntary trade, these humans are poor, probably not much above hunter-gatherer status.

The ability of humans to improve their situation through specialization, taking advantage of locally available skills or resources, builds upon peaceful voluntary trade.  The wealth of nations, Adam Smith’s lesson of specialization in production of pins, builds upon peaceful voluntary trade.  Peaceful voluntary trade is a big deal which it will serve us to see, to probe.  But as yet I do not think we have the instruments (or models) to sense and measure its important parameters.

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